Northern Ireland construction industry poised for recovery after challenging 2025, forecasts CIS

Northern Ireland's construction industry is poised for recovery after a difficult 2025, with project starts predicted to grow by 10% in 2027, according to the latest Construction Industry Forecast from CIS, powered by Hubexo.

The forecast reveals that construction starts are projected to have declined by 17% in 2025 due to geopolitical uncertainty and economic headwinds. However, activity is expected to begin recovering in 2026 with 2% growth, accelerating to 10% in 2027.

Dave Thompson, VP for UK and Ireland at CIS, powered by Hubexo, says: "While 2025 has been a challenging year for Northern Ireland's construction sector, the fundamentals for recovery are in place. Strategic government investment in infrastructure, education and healthcare, combined with improving economic conditions, will drive renewed growth from 2026 onwards. Firms that position themselves now to capture opportunities in emerging sectors will be best placed to benefit from this recovery."

Private housing shows resilience
Private housing construction is forecast to grow by 39% in 2026 and a further 18% in 2027, following a modest 3% increase this year. The sector faced significant challenges in 2025, including political uncertainty, affordability issues and water infrastructure constraints, which dampened planning approvals and construction activity.

Social housing, meanwhile, experienced a sharp 54% decline in starts in 2025, though modest recovery is anticipated with 2% growth in 2026 and 8% in 2027.

Office sector defies wider market trends
The office sector has emerged as a bright spot in 2025, with project starts growing by 42% as demand for high-quality commercial spaces continues. New hybrid working policies are bringing people back to the office on a more consistent basis, driving demand for Grade A facilities. Growth is expected to continue at 18% in 2026, though starts are forecast to decline by 14% in 2027 as the development pipeline moderates.
Hotel and leisure sector sees surge

The hospitality sector has performed strongly, with the Northern Ireland Hotels Federation's Hotels 2025 report highlighting continued growth driven by new investment and projected rises in visitor numbers. Hotel and leisure project starts surged by 174% in 2024, with growth remaining robust at 56% in 2025. A 47% decline is projected for 2026 following reduced approvals, though a rebound of 11% is anticipated in 2027.

Public sector investment supports long-term outlook
Budget allocations are supporting the longer-term outlook across key sectors. The Northern Ireland budget allocated £270 million in capital funding for education and £933 million for infrastructure, focusing on roads, public transport and energy projects.

Education sector starts are estimated to have declined by 30% in 2025 and are predicted to drop to 11% in 2026, before recovering with 2% growth in 2027. Health sector starts are forecast to fall 13% in 2025 and 28% in 2026, though a 10% recovery is projected for 2027 as budget allocations take effect.

Civil engineering starts are expected to decline by 21% in 2025 with a further 6% decline in 2026, before recovering with 24% growth in 2027.

Industrial and retail sectors face headwinds
The industrial sector has experienced a challenging period, with construction starts estimated to decline by 57% in 2025 and a further 15% in 2026, due to geopolitical uncertainty and cost pressures. The sector is expected to recover slightly in 2027 with 3% growth.

Retail construction starts are forecast to decline by 17% in 2025 and a further 19% in 2026 despite a 10% increase in retail planning approvals and 4.7% growth in retail output during Q2 2025. Recovery is expected in 2027 with a 10% increase in projects starting on site.

Community and amenity sector shows strong growth
The community and amenity sector has performed strongly, with project starts growing by 101% in 2025. Growth is expected to continue at 70% in 2026, before moderating with a 9% decline in 2027.

Expert insights
The full findings and many more sector-by-sector breakdowns are available in the new Construction Industry Forecast 2025–2027 from CIS. Packed with expert insights, the report delivers tailored, data-driven intelligence to help construction industry professionals in Northern Ireland grow their business, mitigate risk and make well-informed strategic decisions.