Apartment building 'not viable' in Cork without Government support 

Chamber: 'Cost of building apartments is so high that people can’t afford to rent or buy them, therefore they cannot be built'

There are now plans to build a 16-storey office tower on the site that was earmarked for a residential project.

Cork Chamber has called for urgent and significant Government action to help the private sector deliver affordable apartments in Cork city.

Without a range of specific and targeted interventions, urban sprawl will continue, it has warned.

Chamber CEO Conor Healy said: “The reality is that the cost of building apartments is so high that people can’t afford to rent or buy them, therefore they cannot be built.

“Government must act now, and take significant steps to enable the private sector to deliver."

Mr Healy made his comments following the scrapping by developer John Cleary of his plans for a 25-storey 200-unit residential tower in Cork’s docklands because it was financially non-viable.

The Chamber said Mr Cleary’s decision confirms the findings in a report it published almost two years ago which warned about the affordability and viability of apartment building in the city.

The Chamber and the Construction Industry Federation commissioned study found that the total costs of apartment development, including the normal costs of construction, land, profit and risk, are not sufficient to provide apartments at affordable price levels to satisfy the demand in the local market, while at the same time providing competitive returns to a developer.

It showed that developers have to charge a minimum of €2,500 per month for a two-bed apartment or attach a sales price between €389,000 and €486,000 if apartments are to be viable for rent and owner occupation.

The report included calls for a range of policy changes which could have helped kick-start construction by the private sector of much needed apartments at affordable prices, and at scale. But nothing changed.

Plans scrapped

Last weekend, Mr Cleary confirmed that he has scrapped plans for a residential tower earmarked for the former Sextant pub site after a financial review found that the cost of delivering the project is 15% higher than the anticipated value on completion, making the project completely unworkable.

The review also found that the rents required to make if financially viable would have had to rise an average of 21% from current levels, to as much as €2,800 per month for a two-bed unit. 

Mr Cleary said that was just not sustainable in the Cork market, and he has sought planning from Cork City Council for a 16-storey office block on the site instead.

Mr Healy said while funds such as the Urban Regeneration and Deveopment Fund, announced by the Taoiseach a few months ago, are hugely welcome, they do not impact on planning permissions held today or the numbers of apartments being delivered tomorrow.

“Steps, such as the time-bound removal of Vat for high density apartment construction in urban areas must be implemented, or our urban spaces will know no new living community," he said.

We will remain exclusively dedicated to urban sprawl

“Every form of home has a place in the national response to the housing crisis and apartment living must be a part of the evolution of city life.” 

However, Mr Healy said there are positives to take from this issue, with demand for office space still high despite the pandemic.

“The creation of high value jobs, of inward investment and growth in our region must be a resolute focal point as we rebuild strength and confidence," he said.

“The contribution of action focused developers such as JCD to the economic resilience of the city must be celebrated.

“It is essential that sites throughout our urban areas do not sit unused, and are brought forward to make their contribution.”