Planning data captures strong appetite for city center apartments

Building permits are not a perfect guide for future construction activities. Some are sought only to add value to the site while many construction projects fail for financial reasons. That said, the latest planning data from the Central Bureau of Statistics captures two strong residential market trends here: the recovery in construction in general and the sector’s preference for apartments.

The figures indicate that building permits were granted for 42,991 homes in 2021, compared to 42,371 in 2020. The Central Bank projects that around 25,000 new homes will be built this year, followed by 30,000 and 35,000 homes in 2023 and 2024 respectively.

The second trend is the acceleration of apartment construction, which now eclipses house construction. Of the 42,371 permits granted last year, 26,272 were for apartments, or just over 62%. Nearly 19,000 were destined for Dublin, where foreign investors flocked to the capital’s private rental sector market to take advantage of relatively high returns.

Big funds

This has proven controversial with critics claiming the big funds drive up prices while providing unsuitable accommodation for young families. Dublin City Council is trying to limit flats to be built for rent.

However, a report by property consultants Mitchell McDermott earlier this week warned that efforts by Dublin planners to limit apartment buildings to be built are threatening supply, as costs mean building them to sell is not viable.

The report also captured perhaps the other big industry trend: inflation.

He warned that the price of materials, including steel, wood, windows and bathroom fittings, had risen between 20% and 86% in the past year. This level of price growth poses a risk to many of these projects and to the prospect of the industry achieving rates that approximate market demand, theoretically estimated at 35,000 units per year. It is not clear that inflation, which is fueled by energy prices, will moderate anytime soon.

Business Today

Get the latest business news and commentaryREGISTER HERE

About Gene Schafer

Check Also

Viewpoints: Low-income residents need more market-priced apartments

“Viewpoints” is a place on Chapelboro where locals are encouraged to share their unique perspectives …