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Sunday 25 August 2019

Surge in new apartments as developers try to maximise profits from smaller units

CSO figures welcomed: Housing Minister Eoghan Murphy
CSO figures welcomed: Housing Minister Eoghan Murphy
Charlie Weston

Charlie Weston

There has been a surge in the number of apartments built as developers rush to maximise profits from building smaller units.

New figures show that apartments are the fastest-growing category of new dwellings completed.

The new data comes as the focus of developer activity has moved to fast-track build-to-rent apartment block projects, with these unlikely to go on sale to families.

So-called 'cuckoo funds' have been accused of flooding the market with funding to build and purchase mainly apartments, edging out first-time buyers.

Big corporations spent more than €1.1bn buying a record 2,923 housing units in Ireland last year, blasting through previous records and cementing a radical shift in housing patterns.

These have been described as 'cuckoo funds' because they snap up accommodation before individuals get a chance to buy. It is a trend that is locking many working families out of buying their own homes.

New figures from the Central Statistics Office show that 613 apartments were completed in the first three months of the year. This was a rise of 28pc on the same three-month period last year.

The number of apartments completed represents one in seven of all homes built.

Dublin saw 487 new apartments completed, making up more than three-quarters of all new apartments completed in the first three months of the year.

The CSO does not break out how many of the new apartments completed are available for purchase by first-time buyers and others. Nor does it detail how many apartments completed in the first three months of the year were build-to-rent projects.

The State has been accused of feathering the nests of cuckoo funds, which means developers favour build-to-rent projects.

The scale of benefits for build-to-rent developers is such that they will inevitably choose this path, architect and UCD lecturer Orla Hegarty warned.

This will mean fewer properties for first-time buyers to purchase.

Ms Hegarty says build-to-rent projects have lower planning standards than ordinary apartment blocks, they are more profitable and will draw the majority of investment.

This is bad news for first-time buyers as fewer homes will be built that get put on the market, she says.

It is reported that the yield, or investment return, on rentals here is already the highest in the European Union.

The latest CSO figures show that, across all categories of housing, there was a rise in the number of new homes completed in the first three months of the year, but economists said that completions were still not keeping pace with demand.

A total of 4,275 homes and apartments were completed in the first quarter, up 23pc on the same period last year.

A quarter of the homes built were one-off properties, with one in seven apartments.

Housing Minister Eoghan Murphy welcomed the CSO house completion figures which he said confirmed a strong upward trend across all housing construction activity.

He said the number of new dwelling completions added to the housing stock in the year to end March 2019 was 18,828, up by 25pc compared to the year to end March 2018.

Irish Independent

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