Hibernia Reit CEO says rule changes are needed to deliver residential building
The head of listed property group Hibernia Reit says new building codes geared specifically towards the construction of rental residential accommodation need to be introduced to help alleviate Dublin's housing crisis.
Hibernia Reit CEO Kevin Nowlan said the "fundamental problem" in building rental apartments is that, under the current codes, nobody can make any profit from doing it, hurting supply needed to house workers.
"This is a major issue for Dublin city. It needs to be addressed now or we're going to see long-term damage to our competitiveness," he said.
Commenting on the damage already being caused by the dearth of housing supply, he said: "It's difficult to quantify but we're talking to tenants on the ground and the increase and inflation in rent is a massive issue for them."
Mr Nowlan noted the findings of a recent study by Cushman & Wakefield of residential accommodation costs across Europe's cities.
"They looked at a variety of different types of residential accommodation and they asked 'Well, how competitive is Dublin?' Our rent is twice the rent on average of Berlin. If you think about it, what makes up the majority of FDI salaries is helping their workers pay for their accommodation," he said.
Construction in Dublin city is dominated by offices as opposed to apartments, Mr Nowlan said. "We need more supply but the fundamental problem is nobody can make any profit under the current building codes building rental apartments, and that's why no one is doing it," he said.
"Unless we face up to, and rectify the impasse, you're going to see certain operators building nice apartments for investors from Asia or wherever who may not even rent the stuff out; you're going to see student accommodation and you're going to see serviced apartments. But you're not going to see the main product which is needed which is institutionally-owned and delivered apartment blocks like Ires Reit has done, and what we've done at Wyckham Point in Dundrum."
SEE Commercial Property, Page 10