Dublin the fifth most expensive city in Europe to build property

Dublin is the fifth most expensive city in Europe in which to build property, according to a report by professional services company Turner & Townsend.

The International Construction Market Survey measures input costs for materials and labour in 91 markets to calculate average construction costs and what’s driving them.

Across Europe, it noted that the sharp impact of the war in Ukraine was still being felt. However, activity related to this summer’s Olympics and Euro football championship was “helping to drive opportunities amid cooling cost inflation” as was ongoing demand for data centres.

It found that, at $3,775 (€3,516) per square metre, Dublin now ranks behind only Zurich, Geneva, London and Munich on building costs across Europe. In terms of inflation, costs in the Irish market are rising faster than in all rival European cities except for Warsaw so far in 2024, the report said.

Turner & Townsend, which is majority-owned by commercial property specialist CBRE, said however that it was “optimistic” about Ireland’s construction market as it “begins to recover and move towards green investment opportunities”.

“Despite ongoing geopolitical challenges in Europe, Ireland’s unique position in the post-Brexit landscape and a cooling inflation rate have created a favourable environment for growth,” according to the report.

Dublin continues to see “robust investment” in both private and public sector housing projects, driven by an “acute rental crisis”. The average cost for apartments in the capital stands at $3,666 (€3,414) per square metre, which the report said reflects “strong construction demand”.

“Specialist rental accommodations, such as student housing, are also expanding,” according to the report. “Across the region, green investment is becoming increasingly important as carbon priorities shape development strategies.”

The International Monetary Fund forecasts GDP growth of 1.5 per cent and 2.5 per cent for Ireland in 2024 and 2025 respectively, positioning it ahead of many European counterparts.

“This resilience is largely attributed to Ireland’s strategic market position and relatively lower impact from the Ukraine conflict,” the report says. “As a result, Ireland is expected to emerge from recession and experience economic expansion, providing opportunities for construction, industrial development and green investment.”

Philip Matthews, managing director of Turner and Townsend in Ireland, said the State’s growth forecast positions it as “an outlier” compared to the euro zone’s “sluggish” 0.8 per cent growth outlook.

“This resilience is due, in part, to Ireland’s active, post-Brexit market, which has been less impacted by the Ukraine conflict than many of its European neighbours,” he said.

“We are observing heightened activity across various industries. Dublin in particular has been buoyed by investment into both private and public sector housing developments on the back of an acute rental crisis.

“Nonetheless, we must remain vigilant regarding the rising cost of labour across the Continent.

“Furthermore, the increasing emphasis on sustainability requirements for real estate portfolios is likely to alter investment patterns and asset values. Going forward, it will be essential to carefully evaluate contract models and carbon costs to effectively mitigate risks.”