Major study to reveal true costs of Irish construction
With prime Dublin office rents rising to record levels and developers complaining that costs are among the factors curtailing housing supply, there is increasing concern that Dublin may become a less attractive location for foreign direct investment. Now new moves look set to address the issue as to how Irish construction costs compare with those in other countries. These moves could help the Government and taxpayer to secure value for money.
Construction industry leaders from across the world, including Ireland, have joined together to formulate rules for calculating costs for the world's building and civil engineering projects.
In Ireland Michéal Mahon, chair of the Society of Chartered Surveyors Ireland Quantity Surveyors Professional Group, welcomed the launch of the International Construction Measurement Standards (ICMS) Coalition, a group of over 40 professional bodies established at the International Monetary Fund.
"The accurate comparison of construction cost data across various jurisdictions has been problematic over the years due to the differing manners in which construction cost data is reported. However, ICMS will bring clarity to the measurement and interpretation of construction costs across the world," he said.
The coalition has launched a global public consultation process about ICMS in a bid to improve consistency and reduce investment risk in the global construction industry. Overall, close to $78tn is expected to be spent on infrastructure globally between 2014 and 2025. While construction is a global industry, the way construction project costs are measured varies enormously, hampering decision making and creating barriers to investment.
"In an Irish context, the ICMS will have particular relevance in the short term for both the public and private sectors. In the public sector, the Government for example has commenced a cost comparison study on the delivery of housing across European states and the ICMS shall help to ensure that the cost data collated will be on a "like-for-like" basis both for the initial study and then on a "rolling basis" thereafter. Similarly in the private sector, the ICMS will facilitate for example companies considering investing in Ireland comparing construction costs on a consistent basis with costs in other jurisdictions."
Independent TD Stephen Donnelly recently compared Dublin office build costs with those of other Eurozone countries. He points to a Turner and Townsend Survey which shows that Dublin offices cost an average of €200 per sq ft to build. His research also includes Knight Frank data and the latest Q3 Knight Frank survey shows prime Dublin office rents are third highest in Europe exceeded only by those in London and Paris.
Mr Donnelly estimated that prime Dublin offices sell for €1,278 per sq ft, a figure which he noted is "6.4 times more than it costs to build. In Europe, only Paris and London have higher multiples. And that, in anyone's book, is a bubble."
Edward McAuley of the Society of Chartered Surveyors Ireland says that the UK, US, France, Germany and others all include varying factors when stating construction costs making comparisons very difficult. All stakeholders in the construction and infrastructure sectors can comment on the ICMS draft standard by visiting icms-coalition.org/consultation