Dublin ranks as the second most expensive city for building apartments in Europe, just behind Zurich, according to a new report by Trinity College Dublin and the Society of Chartered Surveyors Ireland. The Building Homes Report, which surveyed ten European cities, revealed that the construction cost in Dublin is €2,363 per square metre, exceeding the average of €2,057 per square metre.
Zurich tops the list with a cost of €2,866 per square metre, while Tallinn in Estonia is the least expensive at €1,367 per square metre. Belfast, notably, is the second cheapest, with construction costs at €1,755 per square metre.
This report, the first to use International Construction Management Standards V3 (ICMS3), compares construction costs using a 'travelling box' method. This method prices a specific apartment block of 39 units across different cities, holding nearly 80 elements constant to allow for a systematic cost comparison.
The study identified three cost groups. The first group, with Zurich alone, has significantly higher costs. The second group, with costs above average but closer to it, includes Birmingham, Manchester, Glasgow, Dublin, and Stockholm. The third group, with below-average costs, includes Amsterdam, Belfast, Brussels, and Tallinn.
Ronan Lyons, Associate Professor of Economics at Trinity College Dublin and one of the report's authors, emphasized the high construction costs in Dublin as a significant barrier to new housing supply. He noted that while structural work costs are lower in Dublin compared to other cities, services and equipment, along with non-structural works, drive up the overall costs.
The analysis suggests that material costs vary less across cities than labor-intensive inputs, indicating that labor costs and productivity are key factors in the differences in construction costs. Despite being geographically close, Dublin's costs are notably higher than Belfast's, prompting a need for further analysis into regulatory specifications, standards, and soft costs.
Bryn Griffiths, Vice Chair of the SCSI Quantity Surveying Professional Group Committee, highlighted that structural, non-structural, and services and equipment costs make up two-thirds of construction costs, with soft costs contributing another 25%. He suggested that differences in architectural design and planning policies also impact costs and called for more flexibility and standardization to reduce expenses.
Griffiths also pointed out that Ireland's relatively low VAT rate on new construction partially explains cost differences with Belfast. He urged the Government to explore new models for delivering zoned and serviced development land and to consider further standardization and research to reduce costs and improve the viability of new housing projects.
The report aims to provide a baseline for future cost comparison exercises, potentially expanding to other cities and property types to enhance the understanding of construction costs and improve housing affordability.
The full report, 'Building Home: Apartment construction costs in Europe with a focus on Dublin', can be read here.
