With housing stock for purchase at all-time low, we should adopt the apartment-for-rent model, as in Europe (where 50% of residences are apartments), says Trish Stokes.
With housing stock for purchase historically low , Ireland must adopt the European model of apartment living, and renting must be seen as a viable option, instead of home-ownership.
The number of people living in apartments in Ireland is extremely low compared to other EU countries. Across the EU, 50% of dwellings comprise apartments. In Ireland, just 12% are apartments.
A recent survey by IDA Ireland, Cork City Council, and Cork Chamber reported that Cork is the destination of choice for workers in the tech industry; seven out of ten tech professionals move to Cork to further their careers. More houses and apartments are needed to meet this demand and to provide for our future requirements.
Despite this, according to data from Q3 2017, the number of planning permissions granted for apartment units has fallen.
Such levels of planning in favour of low-density housing are a concern, particularly with an inward migration of people.
Demand for apartments as a type of tenure has been on the rise in recent years. According to CSO data, in the first ten months of the year, apartments accounted for 24% of Cork city sales and 8% of Cork county sales.
This is an increase on 2016, when apartments accounted for 17% of Cork city sales.
In addition, according to the latest Residetnial Tenancies Board data, average rents for apartments in Cork city are above peak, mid-2000s time levels.
Estate and letting agents have experienced growing demand for apartment lettings and sales, particularly over 2017.
We, at Lisney, let 206 units at The Elysian, in Cork city centre. The apartments within the scheme ranged from one bedroom (61 sqm) to two bedrooms (from 86 - 126 sqm) to three-bedroomed penthouses (243 sqm).
The Elysian is now fully occupied, at rents from €1,276 per month for a one-bed to €3,500 pm for a penthouse. There’s a waiting list of people wanting to live there.
While demand in the city centre for apartments has been strong, in Ballincollig town centre a scheme of apartments, The Quadrants, numbering 125 units, has been fully developed and let over the last 12 months.
These have been in demand by the younger, internationally focused workforce of companies such as Dell EMC and VM Ware.
The appetite for apartment living this year was not just confined to the rental market.
There has been a notable shift in purchasers’ attitudes regarding buying an apartment for owner-occupation. Over the past year, the profile of purchasers in the market has ranged from first-time buyers to those trading down.
The Eden scheme, in Blackrock, offered a mix of apartment types, with prices ranging from €225,000 to €265,000. Blackrock House (the former Ursuline Convent) was transformed into 27 bespoke apartments and attracted huge demand from people looking to trade down.
Sales ranged from €285,000 for a one-bed unit to €625,000 for three beds, with the current showhouse priced at €850,000.
It is uneconomical to construct a new apartment scheme in Cork City. The SCSI recently published a report, ’The Real Costs of New Apartment Delivery’, which focuses on 28 apartment schemes in the pipeline in Dublin (extending to 2,146 apartments), to understand their viability.
This can be used as a guide for Cork. It is not commercially viable to deliver affordable, medium-rise apartments in Dublin.
The actual construction cost of building an apartment made up 43% of the overall costs, with soft costs, such as VAT, levies, margins and fees making up 41%.
Site costs accounted for 16% of the total. Sale prices have been increasing, and will continue to do so, until we see government intervention or revised design criteria and regulation.
An alternative option would be shared living units. The announcement by Eoghan Murphy, Minister for Housing, at the end of December, outlining a change in the design standards for new apartments, is welcome: in the new draft guidelines, Minister Murphy suggested ‘shared accommodation’.
This comprises professionally managed rental accommodation, where individual rooms are rented, including access to shared or communal facilities and amenities.
If adopted, it may ensure that higher densities could be produced at a more cost-effective price within the urban environment.
Consequently, this could stimulate an increase in apartment building and those schemes currently at design stage could be brought to the market quickly to ease the pent-up demand.
Three apartment schemes identified for Cork are located at the Nemo site on Douglas Road (153 apartments permission granted); Horgan’s Quay (239 in planning), and Eden, Blackrock (34 in planning).
While any potential redesign would delay their commencement date, the greater density allowed by this redesign would assist in their viability.
For the market to function, every element in it must also function.
The construction of more apartments, close to the city centre and in the suburbs, will alleviate the pressure in the housing market. Hopefully, we will see more construction cranes in Cork, building apartment blocks, in the near future.
Trish Stokes is a director with Lisney, Cork.
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