Mr. Conor O'Connell:

I thank the Senator for her question. Apartment viability is a conundrum that we have been facing for a long time in terms of construction costs. The Society of Chartered Surveyors has undertaken a construction report of its own on apartments. Every single report that we have done, including in conjunction with Cork Chamber, illustrates how constructing apartments is significantly dearer. There is a long list of reasons for this, including design standards and the elements that go into constructing apartments, for example, the amount of steel, concrete and glazing, managing construction and demolition waste – it is a city centre site and materials cannot be stored there – and getting to and from the site. While some of the problems in the Dublin metropolitan area and other parts of Dublin are due to land costs, I am aware of apartment projects outside of Dublin that have full planning permission and no land costs but are not proceeding because of the viability challenge. Private rented sector, PRS, funders will not forward fund apartments because they are not viable, given the rents achievable and the yields they are seeking. The extraordinary period of material cost inflation has not helped either.

Regarding land costs in the Dublin region, an exceptional market and an exceptional economy have developed in Dublin over the past ten to 15 years. It also has significant geographical constraints. The city centre is right next to the sea, so we cannot develop to the north east, east or south east like we can in other cities. It has the Wicklow Mountains to the south, Dublin Port to the east and Dublin Airport to the north. All of these constraints have made the Dublin land market exceptional.

Not to be long-winded about it, but I would gladly share copies of our many reports on apartments. They would give the committee the details of the elements that go into construction and why it is so expensive.

Forward funding for apartments is much riskier than it is for traditional houses, which can be built in stages. For a modest apartment construction scheme of 50 units at €400,000 or €500,000 per unit, we would be talking about forward funding of €20 million to €25 million because apartment developments cannot be built in stages. It is a risky business.