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Dublin City Council managers say they expect to pay more than €375,000 per home to build apartments on council land at St Michael’s Estate in Inchicore.
“It is unlikely that the final construction cost will be as low as the €375,000 but we will not know that until it goes to tender,” said the council spokesperson, this week.
That figure is based on what the council has paid for projects approved since 1 January 2019, he says.
Those cost an average of €383,609 per home, as outlined in a recent parliamentary response issued by the Minister for Housing Darragh O’Brien of Fianna Fáil.
That is not to be confused with a different figure for homes completed in 2019, a much lower figure, also provided by the Minister recently, of €181,500.
Sinn Fein Housing spokesperson, Eoin Ó Broin TD said that that figure meant it was much cheaper to build homes than buy them.
Those were mostly houses and the prices were based on tenders that had been issued in 2017, says the council spokesperson.
Nowadays, the council is mostly building apartments which are more expensive and construction costs have gone up, says the council spokesperson.
The price cited in O’Brien’s more expensive response includes “abnormal costs” of €47,340 per home on average.
Periodically, a TD asks in the Dáil for up-to-date figures on the cost to councils of building social homes, or a Dublin City Council official presents a new project at City Hall and breaks down how much each apartment will cost.
And councillors eyebrows shoot up. In the new year, they say they want to delve more into why the council seems to be paying so much to build social homes, and whether and why, it is paying over the odds.
Architect and housing commentator Mel Reynolds says the council is paying way over the odds for basic two-bedroom homes.
“You can build a passive plus” – meaning really well-insulated – “detached, four to five bedroom house, A rated and your tender price would be under €300,000,” he says.
That house would be in Dublin in a built-up area and would include several bathrooms and kitting out a “five-star kitchen with Miele appliances”, he says.
Apartments are more expensive to build than houses, due to the need, sometimes, for lifts, and other structural requirements.
An Approved Housing Body forwarded its tender prices for a seven-storey apartment complex, though.
It secured a builder willing to construct apartments at around €200,000 for a one bed and around €300,000 for a two bed. Those are all-in costs including design, professional fees and VAT, but no land.
Assuming a development was split evenly across one-bedroom and two-bedroom apartments, that would give an average construction price of €250,000 per home, which is €125,000 cheaper than the council’s estimate for St Michael’s Estate.
The parliamentary response issued by the Minister for Housing shows that since the start of 2019, Fingal County Council has incurred similar costs to Dublin City Council.
Fingal County Council likewise encountered high “abnormal costs” of €44,795 on average.
The minister’s response says that abnormal costs include, as an example “costs associated with preparing difficult/tight sites for construction”.
But by contrast Dún Laoghaire-Rathdown County Council says it hasn’t got stung for the same skyrocketing costs, it says.
“Construction costs for one-bed and two-bed apartments in new build social housing schemes have been broadly in line with the Unit Cost Ceilings provided by the Department of Housing” says a spokesperson for Dún Laoghaire-Rathdown County Council.
The cost ceilings are guidelines for tender costs, excluding abnormal costs, for councils building new social homes.
A Dublin City Council spokesperson couldn’t explain why it is cheaper in Dún Laoghaire-Rathdown.
“We do not have the background or the detail to the Dún Laoghaire figure, but we presume it relates to an earlier period of procurement,” he says.
A spokesperson for Dún Laoghaire-Rathdown County Council said “this does apply to more recent tenders as well as completions.”
An Ongoing Debate
Councillors are increasingly determined to get to the bottom of the high construction costs in Dublin City Council, they say.
The council’s Director of Housing Delivery Dave Dinnigan said recentlythat it costs the council around €450,000 to build a two-bedroom apartment on land it owns.
Several councillors said that they found that figure surprising.
Social Democrats Councillor Catherine Stocker said that the figure was out of line with the Department of Housing’s figures for the cost of construction, bearing in mind the council already owns the land and doesn’t pay taxes.
Independent Left Councillor John Lyons also looked for a further breakdown of the costs.
The Department of Public Expenditure and Reform should carry out a review of the council’s procurement and tender practices, says Reynolds, the architect.
“Given that current spend levels are being quoted as justification for elevated purchase prices in PPP [public private partnership] arrangements this review is urgently needed before any large scale commitments are entered into,” he says.
Labour Councillor Alison Gilliland, who chairs the housing committee, says that she plans to organise a special meeting to investigate construction costs in the new year.
“There are conflicting statements and views on the cost of building,” she says.
The issues are complex because building apartments is a lot more expensive than houses, she says. She wants to get all competing voices in the same room and get to the bottom of the issue of costs.