Parking spaces for apartments ‘can cost builders €100,000’

Parking spaces for apartment blocks can end up costing property developers up to €100,000 each, which makes such developments increasingly unviable, the director general of the Construction Industry Federation (CIF) has said.

Tom Parlon, a former Progressive Democrats minister of state, said apartment blocks were much more expensive to build than three-bed semi-detached houses.

He said builders applying to build 50 three-bed semi-detached houses received funding to build them in rounds of 10 then they are allowed to sell them before moving on to the next round.

However, when it came to apartments, the developer needed funding for the "entire block" from the outset, Mr Parlon told RTÉ's Morning Ireland.

Builders ‘can’t make viable profit’ on €320,000 apartments

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Mr Parlon was speaking after The Irish Times reported on a recent study carried out by officials in the Department of Housing which found that it was not financially viable for builders to construct "affordable apartments" with sales prices of between €240,000 and €320,000.

Government sources pointed out that viability for builders is achieved with a profit margin of 10-12 per cent but the profit on an apartment could fall substantially below this in the current climate.

The report proposed reducing the number of required car-parking spaces for apartment buildings to help bring down costs.

Lobbied

Mr Parlon said other issues that increased the cost of building were regulations in areas such as population densities, building height restrictions and apartment sizes, issues the CIF has lobbied the Government on in the past.

“Certainly the Irish regulations would be at odds with the international ones,” he said.

Parking spaces, a “substantial requirement” for apartment blocks, were “very, very expensive” to build, he added. “[It’s] very, very expensive to go underground and build car-park spaces. That could cost between €50,000 and €100,000.”

Another issue facing builders was the “dual aspect issue,” where apartments were required to face two cardinal directions (north, south, east, west).

“And certainly the VAT issue with apartments and the development levies. It all adds up,” he added.

Land hoarding

“And I think you will find that substantially less than 50 per cent of the cost of the apartment will be the actual building costs and the other costs then are exchequer costs,” said Mr Parlon.

Aideen Hayden, chair of Threshold, the national housing charity, said there are other issues “we need to tackle as a society” such as land hoarding.

She said “we need to look more closely” at extending other options such as student accommodation.

“The narrative is there’s no shortage of money. However, that’s not what I’m hearing from the individual local authorities, so I think it’s critically important that the money is put into social housing in the first instance, and I do believe that putting [money] into social housing will benefit the general construction sector,” she said.