Dublin remains the second most expensive city in Europe for apartment construction

James

Trinity College, Dublin graduation day, tags: europe apartment - CC BY-SA

Dublin is the second most expensive city in which to build apartments, after Zurich, Switzerland, according to a recent construction cost report that covered ten cities across Europe.

The study, which was a joint effort between Trinity College Dublin (TCD) and the Society of Chartered Surveyors Ireland (SCSI), compared the building costs of a similar apartment building in cities across Europe using a novel measurement method.

In Dublin, the average price per square meter for an apartment was €2,363, which is slightly higher than the €2,057 series average. Belfast, the second most populous city in Ireland, was discovered to be the second most affordable of the ten cities, with a price tag of €1,755 per square meter.

With a price tag of €2,866 per square meter, Zurich was by far the most costly of the ten cities, while Tallinn, Estonia, was deemed to be the most affordable, at €1,367.

Manchester, UK, came in closest to Dublin in terms of cost, at €2,238 per square meter. Glasgow and Birmingham, UK, came in second and third, respectively, at €2,123 and €2,079.

For the first time, the report’s results are computed using the International Construction Management Standards V3 (ICMS3) methodology. It uses an exercise called ‘travelling box’ that uses the same apartment complex’s specifications and design in all ten cities to measure a number of different elements.

The study focused on a seven-story building that originally housed 39 apartments, the majority of which were two-bedroom units, and was constructed in Switzerland in 2011.

One of the report’s authors, Ronan Lyons, an associate professor of economics at TCD, stated that excessive building costs have “affected the ability of the housing system” to efficiently produce the necessary volume of housing stock.

He also noted that his study is the first to break down the cost per square meter into distinct components.

Comparing Dublin to other cities

Lyons explained that while Dublin is somewhat cheaper than the typical city for structural works involving concrete, its high overall cost is largely due to expenses in services and equipment, which includes heating, power elevators, and non-structural works like floors, windows, and carpentry.

He added that the price of materials varies less than labor-intensive inputs, making the cost and productivity of labor significant factors in overall construction costs.

Supply chain considerations are less important, as shown by Belfast, just over 140 km from Dublin, being one of the cheapest locations among the ten surveyed.

In addition, Lyons stated that policymakers need to address the productivity disparity that exists between Belfast and Dublin and comprehend how “regulatory specifications and standards” and variations in soft costs affect construction costs in the end.

According to co-author of the report Bryn Griffiths of the SCSI, “structural costs, non-structural costs and services and equipment” comprise two thirds of the construction costs of an apartment, with “preliminaries, risk and taxes” making up the remaining 25%.

But he also mentioned that wealthier cities, like Dublin and Zurich, were typically “more expensive right across the board.”

The survey compared the cost of building a Swiss apartment block in ten different cities, showing that its architectural design differs significantly from those typically constructed in Ireland.

Moroever, the current designs in Ireland lead to higher costs, and Griffiths suggests that adopting more flexible and alternative planning approaches could help reduce these expenses.

Even with Ireland’s comparatively low construction VAT, Griffiths continued, the country still finds it difficult to supply the market with “zoned and serviced development land” in a manner that is comparable to that of other EU nations.

More standardization in home design, in his opinion, would help cut costs. He has also urged the government to look into ways to lower the “soft costs” of construction.

Griffiths stated that one of the main objectives of the report was to provide a baseline for future exercises, potentially expanding to other cities and property types, and highlighted the opportunity to better understand costs and improve the viability and affordability of new homes, urging the government to take advantage of it.

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