Dublin is now the 6th most expensive market to build in

Many of you might have read highlights from the most recent Turner & Townsend International Construction Market Survey in last week’s Irish Independent. The findings for 2018 so far are not entirely unexpected. Dublin is listed among the world’s “hot” markets due to the large number of large-scale projects currently underway.  In fact, Ireland’s capital city is now ranked as the sixth most expensive place to build on the globe. This is taken from research in both the commercial and residential sectors across 46 different markets worldwide. This sixth place ranking is based – according to the survey – on average construction costs of €2,608 per square metre.

New York remains the most expensive city in the world to build. The average cost of construction there has increased 3.5% year-on-year to €3,276 per square metre.  Ranking between New York and Dublin are San Francisco, Hong Kong, Zurich and London, the latter now averages €3,039 per square metre build costs.

The key highlighted figure of concern is the estimate that building costs in Dublin are set to rise by a further 7% this year. This anticipated hike is attributed to the current building boom in the office sector, the continued development of student accommodation and the rapid growth of the emerging build-to rent (BTR) sector in Ireland, but particularly in Dublin. This ramping up of construction activity by 18% after a decade-long lull is putting unsustainable pressure on labour, infrastructure and industry resources. We know that developers and builder are already feeling this strain.

While the survey analyses all input costs for commercial and residential projects across 46 markets, Mark Kelly, managing director for Ireland at Turner & Townsend was quick to point out that addressing the looming skills shortage is one of the major challenges to be faced when trying to manage domestic cost inflation. This particular problem is likely to become more pronounced as activity increases further over the coming years. While is it something that we have talked about here in the past, we know that there is no immediate solution. Various representative bodies like CIF, Engineers Ireland and the SCSI are activity promoting the industry amongst young students and potential apprentices, however, this is more of a long term solution, it will not help site managers get qualified bodies onsite this summer. In the short term, most businesses looking to expand their teams are trying to attract (poach?) staff from competitors with lucrative rewards, this is not sustainable given the size of Ireland.  Although we did notice that one engineering firm is branching into recruitment – which is quite telling in itself!

By the way, did  anyone else spot that site on 112 – 114 Townsend Street (at the intersection of Lombard Street) hit the market this week?  With a guide price of €2m, there is likely to be strong interest from both residential and commercial developers.

Ian Lawlor
086 3625482

Director / Business Development
Lotus Investment Group