Developers cannot build two-bed apartments around Dublin for under €463,000 unless the Government slashes its contribution to costs, according to the lobbying group for so-called “cuckoo funds”.
Irish Institutional Property - the lobbying group for funds that since 2013 have grown to dominate residential apartment development and management - published new research today breaking down the average build costs of approximately 10,000 units currently under construction on the capital's edge.
It said a typical two-bedroom apartment in a medium-rise building in suburban Dublin costs cuckoo-funded developers €301,600 to build – before land and tax costs and an 11pc developer profit margin are added. These take the typical sale price to €463,100.
Stephen Ashe, director of the Linesight consultancy that produced the report, said apartments become increasingly more expensive the higher the number of floors, so the analysis focussed on buildings of five to eight storeys.
It excluded developments under way in central Dublin, which he said involved at times double the cost factors, which include land contamination and demolition work in tightly packed, high-traffic locations.
Properties subject to analysis stretched all along the M50 commuter belt and suburbs, including Blackrock and Portmarnock.
The typical two-bed apartment of 83 square metres, Mr Ashe says, costs €225,500 in pure construction costs including labour. Planning, professional fees and compliance add €24,000; development staff, legal support and administration €13,200; finance €11,900; and water and utility connections €6,100.
The report calculates that Government-set costs add €107,900 to sale costs, chiefly 12pc VAT, site charges and levies, while developers’ profit averages €52,700 per unit.
Developers at the briefing, including Glenveagh chief executive Stephen Garvey and Ires Reit chief executive Margaret Sweeney, said institutional funds provided the only vehicle in today’s housing market to finance large-scale apartment developments.
“None of this would be getting built without the role of institutional funds,” Mr Garvey said. “Government contributes 40pc to my costs. We’re not going to work for nothing, so this is a base-line picture of what is possible in the market right now.”