Dublin among the priciest cities for apartment building

Dublin has ranked as the second most expensive city in a list of ten when it comes to the cost of building apartments.

The report, compiled by the Society of Chartered Surveyors Ireland and Trinity College Dublin, calculated the cost of building an apartment in the Irish capital at €2,363 per square metre.

That was just over €300 higher than the average of €2,057 per square metre across the ten cities surveyed.

Zurich in Switzerland was the most expensive city for apartment construction at €2,866 per square metre, which was notably higher than the other cities.

The Estonian capital, Tallinn, had the cheapest construction cost at €1,367 per square metre.

Belfast emerged as the second cheapest location in which to build apartments with the cost per square metre of €1,755.

The prices were compiled using the International Construction Management Standards V3 (ICMS) which allows for a comparison of construction costs across the different markets.

The quantities involved across nearly 80 elements are held constant, enabling a comparison of costs on a like-for-like basis to be made across locations.

The chosen development for this exercise was a block of 39 apartments over seven storeys, most of which were two-bedroom apartments.

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Ronan Lyons, Associate Professor of Economics in Trinity College Dublin and one of the authors of the report, said the findings point to the role that elevated construction costs – in Dublin in particular – play in acting as a barrier to new housing supply.

“For some time, we have known that Dublin is an expensive place to build housing, with costs per square metre high compared to peer locations,” he said.

This is something that has affected the ability of the housing system here to build the volume of homes needed. This report is the first to break down that high-level figure into the different components that go into building a home.

He explained that Dublin was somewhat cheaper than the typical city for structural works, typically involving concrete.

However, Dublin’s high overall cost is due in particular to two headings – services and equipment – which includes heating, power elevators, and non-structural works, which covers items such as flooring, windows and carpentry.

“Across all cities, the analysis indicates that the price of materials varies far less than more labour-intensive inputs. This means that the cost and productivity of labour in construction plays a significant role in driving overall differences in construction costs,” Mr Lyons said.

“Supply chain considerations appear to be less important, with for example, Belfast – located just over 140Kms from Dublin – one of the cheapest locations among the ten surveyed,” he added.

Bryn Griffiths, Vice Chair of the SCSI Quantity Surveying Professional Group Committee and one of the authors of the report, said policymakers must look closely at hard costs to better understand differences in residential construction costs across cities.

“This report shows that on average structural costs, non-structural costs and services and equipment make up two thirds of the cost of apartment construction. Some of the soft costs in the report such as preliminaries, risk and taxes make up a further 25%. The more expensive cities such as Zurich and Dublin tend to be more expensive right across the board,” he said.

The report notes that if VAT ratres were at zero, Dublin would rank as the fifth most expensive city, with a cost similar to the British cities included in the survey.

“This explains some of the differences in costs with Belfast,” Mr Griffiths noted.

“While the report does not advocate the abolition of VAT here it does call on the Government to examine the way zoned and serviced development land is delivered to the market in other European countries. By doing this we believe it could identify new models for the more cost-effective delivery of key road and utility connections,” he explained.