Deloitte Crane Survey
Over 4 million sq. ft. of office space under construction in Dublin, according to Deloitte’s Crane Survey
Dublin Crane Survey findings:
- Residential: more than 3,634 residential units under construction in 2017
- Office: over 4 million sq. ft. of new and redeveloped office space under construction in 2017
- Student: 13 major student accommodation schemes under construction in 2017 will deliver over 4,500 beds when all completed
- Hotel: 929 hotel rooms developed over the course of 2017
The housing deficit and strong economic fundamentals in the Irish economy are driving development in Dublin, according to the Dublin Crane Survey, a report which measures the volume of development taking place across the Dublin City Council area and its impact, which was published by Deloitte today.
The report captures the development of new schemes and the significant refurbishment of property including office, residential, student accommodation and hotels and covers the period from December 2016 to November 2017.
Commenting on the 2017 figures, Michael Flynn, Real Estate & Infrastructure National Leader at Deloitte said:
Overall 2017 saw a busy year in construction with some progress being made on the residential side and the emergence of a build-to-rent market. It’s clear that the North and South Docklands are the epicentre for development activity in the commercial space, that there is strong development in student accommodation, which is projected to continue into 2018, and that Brexit effects remain subdued as hotels and the commercial office market have yet to be impacted fully.
While current plus planned development levels for commercial property should be sufficient to satisfy potential Brexit demand, it is clear that the residential supply issue needs to be solved in order that Dublin remains attractive for target companies. Future challenges include increasing required infrastructure delivery in a timely manner and ensuring sufficient capacity in the local construction market and supply chain.
2017 saw a positive step forward for residential development in the Dublin City Council area, with 42 residential sites under construction. These schemes will add a total of 3,634 new residential units when completed. The increased level of activity in the sector has resulted from a number of factors, including renewed developer confidence, increased availability of credit from both traditional and alternative sources and the drive to meet increasing demand in a city which is experiencing a housing shortage. The pipeline for new residential development across Dublin is strong and looks set to continue into the medium term as new entities enter the market.
Dublin’s build-to-rent investment market reached €280 million in 2017 and while it is still a relatively new model in Ireland, the Irish residential sector is attracting more institutional capital than before and build-to-rent schemes are beginning to appear on the landscape.
Michael Flynn mentions:
The strong year, however, was not without issue. Challenges remain with respect to the efficiency of processes, availability of land, and reducing cost to improve overall economics of homebuilding. Ultimately, the increase in the supply of housing needs to be maintained in order to ensure that Dublin City remains an attractive destination for new business investment while also solving the wider domestic housing supply issues. This is particularly relevant as the impact of Brexit continues and UK-based companies consider future EU location needs
In Dublin City Centre, office development has been the most active market segment. According to the Deloitte Crane Survey count, there are 29 major developments underway that will culminate in c.4,026,431 sq. ft. of new office space when complete.
General sentiment is that Dublin city is at the peak of the current office development cycle. The pipeline for new office space remains strong, however, with the market bolstered by strong fundamentals (strong economic growth, low unemployment, low interest rates, low inflation) in the underlying economy and outlook is positive for 2018.
Since the UK voted to leave the EU there has be much speculation on how many firms would locate to Dublin to maintain the passporting rights required to sell services into Europe. A large uptake in UK demand for Dublin office space was expected and for the most part is yet to materialise as companies have delayed announcing major relocations following the triggering of Article 50 in March. However, it is clear that a resolution to the housing supply issue is required to make the overall Dublin package attractive to companies.
Education and student housing
This study has tracked 13 of the major schemes underway in the Dublin City Council area which will bring 4,529 beds to the market when completed.
The recent activity also marks a changing dynamic in the student accommodation market which usually had been provided by third-level institutions. The current activity suggests that there is increased appetite among the private sector in the student housing market. Flynn mentions:
The outlook going forward is positive. After a prolonged shortage, the market is responding and attempting to bridge supply. For the Dublin region, the combination of catch up on the supply side and increasing demand suggests that the market will be an active one going into 2018.
Hotels, retail and leisure
The market dynamics in the capital city have increased the attractiveness of the market and led to an increase in planning permissions being sought and new hotels being developed. Over the past 12 months, Dublin saw development activity that will add 929 rooms across the city, when completed.
On the retail and leisure side we saw a number of refurbishments and some new units being developed including the refurbishment of Bewleys Café on Grafton Street.
Given the ongoing demand, it appears that the hotel sector will continue to increase capacity in the medium term. Within the Dublin City Council area being considered, retail and leisure development are likely to continue their link with brownfield redevelopments/refurbishments rather than green-field facilities.