A new report has found that Dublin is the second most expensive city in Europe to build an apartment in. A study of construction costs compiled by the Society of Chartered Surveyors Ireland (SCSI) and Trinity College Dublin found that the cost of building an apartment in Dublin is €2,363 per square metre, just over €300 higher than the average for the 10 cities assessed in the report.
The Irish capital’s costs were only surpassed by Zurich in Switzerland, where the cost per square metre was €2,866.
However, it was more expensive than Manchester (2,238 euros), Stockholm (2,155 euros), Glasgow (2,123 euros), Amsterdam (1,824 euros) and Brussels (1,804 euros). Tallinn, the capital of Estonia, was the cheapest at 1,367 euros per square metre.
The figures contained in the report are for the first quarter of 2020, before the pandemic and the recent energy price shock hit, both of which caused a significant increase in construction costs.
Perhaps the most surprising result is that Ireland’s second largest city, Belfast, was ranked as the second cheapest place to build an apartment, with a cost per square metre of €1,755.
The disparity between Dublin and Belfast may be partly explained by the fact that in the UK, the construction industry has a zero rate of VAT.
“If the VAT rate was zero, Dublin would be the fifth most expensive city, with costs comparable to those of all the UK cities surveyed,” said Bryn Griffiths of SCSI, one of the report’s authors.
The report uses the International Construction Management Standards System to compare construction costs between cities, and while it includes the so-called “hard costs” of construction (the brick and mortar elements), it does not include all of the so-called “soft costs” of construction. Soft costs such as land, financing and developer margins are excluded because applicable rules and standards vary between jurisdictions.
The report used a typical seven-storey block of 39 apartments (most of which were two-bedroom apartments) as its benchmark and found that two-thirds of the cost of an average apartment was made up of average structural and non-structural costs, as well as services and amenities.
While Dublin was slightly cheaper than the average city for structural works, including concrete works, the city’s overall higher costs are mainly due to the relatively high costs of services and amenities, including non-structural works such as heating, electric elevators, floors, windows and carpentry.
Griffiths said expensive cities like Zurich and Dublin tended to be more expensive “across the board”.
Report co-author Ronan Lyons, associate professor of economics at Trinity College Dublin, said the findings highlighted the challenges facing Dublin in particular, with high construction costs acting as a barrier to the supply of new housing.
“It has long been known that Dublin is an expensive place to build houses, with higher costs per square metre compared to comparable areas, which impacts on the ability of the housing scheme here to build the number of homes we need. This report is the first to break down these high-level figures into the different components that go into housebuilding.”
