Limerick improvement projects

rebs23

Cookiemunster wrote: »

The prices are higher, because the building costs are higher in Dublin. It would be far cheaper to build in Limerick.

Unfortunately not that much. The big variable is land prices which are reflected in the market price differential between regions but all other costs are largely similar. There may be a variation in labour costs but not much, material costs are similar.
Apartment building is simply not viable in Ireland not due to construction costs but due to delivery costs and regulatory costs. It's probably one of the reasons Limerick 2030 cannot even consider apartment development for the Opera centre site and that is even with Limerick 2030 not having to factor in land costs or land replacement costs.
If the state or semi state agencies cannot make it work then certainly private developers can't.

keane2097

The report says that the site cost makes up 16pc of the total price, the 'bricks and mortar' accounts for another 43pc, and the remaining 41pc is made up of 'soft costs', including €9,000 in selling costs, levies and Vat. The builders' profit makes up €52,000, or 12pc.

Costs could be reduced by removing the requirement for car parking (€2,000-€36,000 per unit), development levies (€10,000-€13,000), cheaper finance at 7pc (€5,000-€11,000), a 9pc Vat rate (€13,400-€19,820) and making apartments 10pc smaller (€6,000-€9,000).

Site cost (16%) and profit (12%) would seem like considerable discounts. If apartments would still not be viable after a cost reduction of nearly 30% something is almost unbelievably wrong. Like, literally unbelievable.

keane2097

Sorry, forgot the link:

https://www.independent.ie/business/personal-finance/property-mortgages/apartments-now-cost-more-to-build-than-houses-experts-36255926.html

rebs23

keane2097 wrote: »

Site cost (16%) and profit (12%) would seem like considerable discounts. If apartments would still not be viable after a cost reduction of nearly 30% something is almost unbelievably wrong. Like, literally unbelievable.

Generally you will not get finance unless a developer can show a 15% profit no matter what developer you are state or otherwise.
I'd agree with you though there is something very wrong in the regulatory environment that makes constructing apartments so uneconomic. Look at the market price for apartments in Limerick at the moment, it simply does not make sense to build them for sale or for rent.
Apartment construction is unlikely to take place for several years in Limerick.

keane2097

rebs23 wrote: »

Generally you will not get finance unless a developer can show a 15% profit no matter what developer you are state or otherwise.
I'd agree with you though there is something very wrong in the regulatory environment that makes constructing apartments so uneconomic. Look at the market price for apartments in Limerick at the moment, it simply does not make sense to build them for sale or for rent.
Apartment construction is unlikely to take place for several years in Limerick.

The Bishop's Quay development is expected to include an apartment block as I recall.

I wonder what's special about that? Access to cheaper finance maybe?

zulutango

rebs23 wrote: »

I'd agree with you though there is something very wrong in the regulatory environment that makes constructing apartments so uneconomic. Look at the market price for apartments in Limerick at the moment, it simply does not make sense to build them for sale or for rent.
Apartment construction is unlikely to take place for several years in Limerick.

And permitting more and more suburban development (retail, residential, educational, etc) is only going to make it less likely.

zulutango

keane2097 wrote: »

The Bishop's Quay development is expected to include an apartment block as I recall.

I wonder what's special about that? Access to cheaper finance maybe?

And according to the planning file, the original intention was for the whole development to be apartments only but the Council insisted on it being a primarily office development. The rumour is that he wants to revert to it being just an apartment development.

air

The primary issue is that all the additional service costs for new suburban development (new schools, roads, extension of water, sewage, electricity and other services) are not directly funded by the purchase price of new houses. None of these really apply (bar schools perhaps) with an apartment development in a brown field city centre site. As a result they are far better value for society as a whole.

zulutango

air wrote: »

The primary issue is that all the additional service costs for new suburban development (new schools, roads, extension of water, sewage, electricity and other services) are not directly funded by the purchase price of new houses. None of these really apply (bar schools perhaps) with an apartment development in a brown field city centre site. As a result they are far better value for society as a whole.

Fair point. But as I understand it development levies are the other way around. Developers are charged a lot more for city centre developments than suburban ones, which seems quite wrong. If the true cost of suburban development was put on the builders and the homeowners then there'd be a lot more people living in the city and in higher quality accommodation also.

air

Exactly. Cross subsidisation of suburban development is the real reason behind the dearth of high density housing throughout the whole country. Improved density reduces the costs of living for everyone - both for carrying out private life and providing public services. With a level playing field, high density would win out naturally but that's not what we have at present. The government are happy to subsidise low density, innefficient developments through general taxation.

keane2097

zulutango wrote: »

And according to the planning file, the original intention was for the whole development to be apartments only but the Council insisted on it being a primarily office development. The rumour is that he wants to revert to it being just an apartment development.

So what gives?

Why is this guy mad to build a load of apartments when apartments are so expensive to build that no one can afford to buy them?

zulutango

Maybe he's looking at the trend rather than the current prices. Prices are rising fairly fast in the city centre. While they aren't high by national standards they seem to be catching up. And the local authority (via Limerick 2030) is determined to direct investment to the centre also so perhaps he's taking a bet on market prices being a lot higher in a few years. If you've 3000 workers in the Opera site, then a good chunk of them will like the idea of living in a nice apartment overlooking the river, if it's designed well.

kilburn

If its designed well is the question the current architects pump out the same generic unimaginative crap consistently and people still go back to them.

If i was building a landmark building in the city i would want a bit of the wow factor and go for something bold

Long term apartments should return the highest yield cash flow is king

zulutango

kilburn wrote: »

If its designed well is the question the current architects pump out the same generic unimaginative crap consistently and people still go back to them.

If i was building a landmark building in the city i would want a bit of the wow factor and go for something bold

I think it's partly down to the architects and partly down to the developer. An architect can only design to the standard that the developer is willing to pay for. But I don't want to let architects off the hook either. Some of the well known firms in this city have been responsible for awful muck.

somespud

Electric Storage Heaters seem to be the norm in most apartments thats a no for me straight away no matter where the location is.

mart 23

kilburn wrote: »

If its designed well is the question the current architects pump out the same generic unimaginative crap consistently and people still go back to them.

If i was building a landmark building in the city i would want a bit of the wow factor and go for something bold

Long term apartments should return the highest yield cash flow is king

Depending on the standard and quality of the wow factor as you call it and the bold design , it may add a considerable cost to the building of the Apartment block

mdmix

zulutango wrote: »

And according to the planning file, the original intention was for the whole development to be apartments only but the Council insisted on it being a primarily office development. The rumour is that he wants to revert to it being just an apartment development.

do you have a link or some sort of reference for this originally intended as fully residential? if there was some way of it reverting back that would be fantastic

kilburn

mart 23 wrote:

Depending on the standard and quality of the wow factor as you call it and the bold design , it may add a considerable cost to the building of the Apartment block

Build a top quality building and it will pay for it self

Strettie11

mdmix wrote: »

do you have a link or some sort of reference for this originally intended as fully residential? if there was some way of it reverting back that would be fantastic

Details on this post of original plans for bishops quay

http://www.boards.ie/vbulletin/showpost.php?p=104012242&postcount=73

zulutango

mdmix wrote: »

do you have a link or some sort of reference for this originally intended as fully residential? if there was some way of it reverting back that would be fantastic

Here you go. I got this from the Architectural Statement in the planning file. You can sift through it yourself if you go on to the planning section of the Council's website. The reference number is 16800.

pigtown

I hope it reverts to being primarily residential. There'll be no shortage of offices in the city but apartments would be very welcome.

I can't see how Kirkland are going to compete with Limerick2030 anyway, they'll inevitably have to charge a higher rent than the Hanging Gardens across the street which is going to be of an equal quality.

rebs23

pigtown wrote: »

I hope it reverts to being primarily residential. There'll be no shortage of offices in the city but apartments would be very welcome.

I can't see how Kirkland are going to compete with Limerick2030 anyway, they'll inevitably have to charge a higher rent than the Hanging Gardens across the street which is going to be of an equal quality.

A big issue for any investor is how to compete with Limerick 2030 (no land costs and probably lower interest rates for development loans) whether offices or housing.
Office market is probably saturated anyway.

pigtown

I don't think we'll need private office accommodation in the city for a decade anyway. Residential is where private money should be directed.

mdmix

zulutango wrote: »

Here you go. I got this from the Architectural Statement in the planning file. You can sift through it yourself if you go on to the planning section of the Council's website. The reference number is 16800.

thanks for that. never expect too much forward thinking from the council but even this was shocking to me. i had hear this mentioned before but thought it was just hearsay! there is clearly an agenda at play, and I'm surprised that refusing planning permission for a large scale residential development in the city centre in the midst of a housing crisis did not at least spark some sort of outcry. beyond the council as a whole, this is a failure on independents, smaller parties and local media for not making this decision known at the time.

Cookiemunster

mdmix wrote: »

thanks for that. never expect too much forward thinking from the council but even this was shocking to me. i had hear this mentioned before but thought it was just hearsay! there is clearly an agenda at play, and I'm surprised that refusing planning permission for a large scale residential development in the city centre in the midst of a housing crisis did not at least spark some sort of outcry. beyond the council as a whole, this is a failure on independents, smaller parties and local media for not making this decision known at the time.

AFAIK they didn't refuse permission. It never officially went to planning as residential.

zulutango

In the pre-planning meeting the Council would likely have said that they don't like the apartment plan but they would be supportive of an office development so the developer went and changed it.

It just is evidence for something that we all know. The Council doesn't really see the city centre as a place for people to live. It's all for more sprawling semi-detached estates where people drive in and out to work, because that's the kind of suburban, car dependent paradise the planners and officials themselves live. They just can't see the city as being for anyone other than the poor, the young, forrin people and weirdos. It's planning from the 1950's and entirely discredited. Limerick deserves better.

Cookiemunster

http://http://www.limerickleader.ie/news/home/279793/limerick-is-buzzing-people-should-start-taking-notice-2030-plan-needs-developers.html
Important bit from the waffle in the above article. The finance has been sourced to build the Opera center development.

An €85m loan from the European Investment Bank has been approved for the development of large-scale infrastructure plans in Limerick, across four strategic sites.
A further €85m is in the final stages of approval from the Council of Europe Bank, again anticipated to be on a low interest rate loan of approximately 1.2% over 25 years.

rebs23

A lot of money being borrowed by the Limerick rate payers for speculative development? Wow some result to secure €85 million from EIB, eventhough that really puts an end to private developers investing or building medium to large scale commercial developments in Limerick. Market saturated.
Apartment market just not viable so mixed use also out of the equation, really difficult to envisage private developers entering the Limerick region at any scale as Mr. Brosnan would like. The whole concept seems counterproductive.

zulutango

You'd hope they've done their due diligence and that they'll be able to rent the office space that they're going to build. If they can't then who repays the loans? It could be a serious cluster**** in the making.

dominatinMC

Christ, what's with all the negativity on here...you'd swear the loan application got rejected instead of approved - although maybe some would be happier with that outcome! Yes, private developers will find it hard to compete with L2030, but wouldn't it be worse if L2030 didn't exist and the sites were just going to waste. What's there to say that Limerick was going to avail of a landslide of private investment anyway?

If my reading of the situation is correct, it looks like L2030 will be prioritising office development. If this is the case, there is still potential for private investment in residential development in the city. Of course, such an initiative would need the support of the council, which seems to be lacking at present. Hopefully, the Bishops Quay development will revert back to the original plan of primarily residential. If that's successful, others could follow suit..