Source: Mark Stedman
THE COST OF building in Dublin is forecast to jump by 7% this year putting the capital as one of the most expensive cities for construction in the world, a new report has claimed.
The International Construction Market (ICM) survey put Dublin in third place behind London and Zurich as the most expensive city to build in Europe and landed it in seventh place globally.
Against the backdrop of Brexit uncertainty, the report found Dublin was a “hot” construction market with costs increasing by up to 7%, and outpacing the global forecast average of 4% over the next 12 months.
The ICM survey puts the average cost of building in Dublin at around €2,900 p/m2, while London came in with an average cost of €3,365 p/m2 and Zurich came in at €3,334 p/m2.
Last month the Construction Industry Federation (CIF) warned that construction costs would increase in any Brexit scenario, as a report revealed half of businesses had not engaged with suppliers – many from the UK – on cost implications of the UK’s exit from the EU.
“In the immediate term post-Brexit, the supply chain will be extremely challenged to absorb costs and many companies have already been struggling with increasing input and labour costs,” CIF director general Tom Parlon said in a message to members at the time.
Mark Kelly, marketing director Ireland at Turner and Townsend, who carried out the ICM survey said Dublin’s “hot” status is due in part to the surge in commercial and residential projects in recent years.
“Market confidence and construction demand in Dublin hasn’t been too badly shaken by the continued uncertainty surrounding Brexit in the UK, yet largely insulated by the economic revival we’ve seen in Ireland over recent years,” he said.
“The upturn has attracted a wave of large office and residential projects in the Irish capital, and the early spoils of Brexit have added further momentum as some major occupiers look to relocate from London,” he added.
Kelly also identified a skills shortage within the construction industry here which is expected to further exacerbate costs as wages rise.
Overall, two-thirds of the markets surveyed reported a trade labour shortage. In Ireland, this has pushed the average hourly wage up 5% in the past 12 months, to €35.70.
“Another factor currently clouding the market outlook is mounting construction cost pressures, with demand relatively high across the continent, and investment only likely to continue this upward march,” he said.
“The shortage of skilled labour and supply chain capacity in Europe is becoming increasingly problematic – driving significant competition on wages and inflating construction costs further.”
Globally, San Francisco reigns as the most expensive city for construction in the world with a cost of €3,989 p/m2 ahead of New York which previously held the title.