Ireland’s construction sector grew by 15 per cent last year and is expected to expand by a further 20 per cent in 2017, according to a new forecast.

The estimated value of construction production was €14.6 billion in 2016 with output mainly driven by commercial building, according to Aecom’s annual review.

However, while construction activity began to pick up outside the capital in the second half of the year, it remains sluggish compared to the greater Dublin area.

Employment in the sector rose by 9,000 in the third quarter versus the same three-month period a year earlier, the review shows.

Continued strong demand will see the commercial office sector in Dublin continue to boom this year. But, because of higher rents and housing shortages, companies are increasingly looking to invest further afield, the study says.

John O’Regan, Aecom’s head of programme, cost and consultancy, said that while the sector is on the up, there is a need to attract more skilled people back to the country and to maintain competitiveness and address deficits arising from years of underinvestment.

“Construction spend should generally account for 12 per cent of gross national produce (GNP) but clearly after the economic crash investment fell well below that level. In fact, since 2009, the shortfall has been €63 billion and a further €26 billion is projected by 2022 unless corrective action is taken,” he said.