SCSI Report –
The Real Cost Of New Apartment Delivery
The Society of Chartered Surveyors Ireland launched their second report on the Real Costs of New Apartment delivery today. This significant report analyses the data received from nearly 10,000 apartment and examines Total Cost, Viability and Affordability. It finds that Affordability is still a big issue for apartment purchasers with a couple needing a joint income of €92,000 to purchase the lowest cost unit.
The report was chaired and authored by Mitchell McDermott Director and co-founder, Paul Mitchell. Paul also wrote the first report examining Apartment costs and viability in 2017.
There is positive news in the report that total development costs (hard and soft costs) for medium rise units have reduced by -2 to -9% since 2017, mainly due to more flexible design guidelines from the Department of Housing, bigger project sizes leading to more economies of scale and reduction in car parking requirements. These changes have helped to offset tender price inflation and the cost of regulation over the past 3 years. Site costs are an important part of the overall costs and the 2020 report shows a reduction on 2017 in that the locations where sites are being developed e.g. non-waterfront sites are costing less than the more prominent sites.
Just over three quarters of the units examined are for rent. The report directly compares the financial viability of Build to Rent and Build to Sell and shows that Build to Rent is more viable than Build to Sell, particularly in urban centres when underpinned by city rents.
The report sets out a number of recommendations under Affordability, Costs and Supply including an extension to the Help to Buy scheme, better efficiencies in the construction industry, more resources in key delay areas such as Planning and Irish Water and a review of the Judicial Review process for planning permission grants.
Please click here to access the report.