Hypothetical Price (3 Bed Semi ) w/todays land + builders cost in Swords for example or any suburb of Dublin
Considering:
Land Prices have collapsed and are in the toilet
Builders/Developers have reduced their margin on builds and labour(electricians,plumbers,brickies) can be hired for significantly less than in the past
Leaving aside excess supply, hypothetically if a developer wanted to build a 100 unit estate, how much do you guys reckon he/she could deliver a reasonable middle of the road 3 Bed Semi-D in todays reality with a “normal margin” for himself
Land is priced artificially high and there are market supports in place to keep it that way, i.e. NAMA. So it’s almost impossible to suggest a fair value on land at the minute.
The more apposite question is what return would a solvent prudent developer / builder be satisfied with today on any particular development?
Well self build prices (from Boards.ie) seem to be in the region of E150/sqft, with E100/sqft is possible.
A builder building 100 houses would get better deals on materials and have efficiencies across employment, but would also have to put in more infrastructure - lighting, sewerage, etc. They also have to pay someone to do the bits of the build that people will typically do themselves.
Estimate E90/sqft
A 3 bed house is about 1000sqft, so at a guess, a builder can build them for E90,000 each.
Site prices, I’ve no idea. You can buy five acres of agricultural land in North County Dublin for E170K daft.ie/1478923
twenty houses on 1/4 of an acre each - 8.5K, that seems low to me, I don’t know why, but I have E20K in my head as a not unreasonable figure for a semi-rural/outer suburban area. There will also be some planning fees related to the site.
Since I’m pulling numbers from thin air, I’m going to go with that.
As for a reasonable return on the money.
The money is tied up for a considerable amount of time. Say two years from initial land purchase to final sale of the house, so that’s two years “return on capital”
There’s also considerable risk attached to the scheme, so I wouldn’t expect the return to be low. Maybe 10% - 15% per year, so a profit margin of 21% to 32% over the life of the project.
So a reasonable price might be E133K - E145K for the houses.
A bit more if they’re close to amenities (higher site price)
If it was actually in Sword village, my notional estimated reasonable site price is about E50K, again not sure why.
but that’d be E163k to E175K
That said, it’d probably still cost you E150K + site cost to build the house yourself, so it can be argued that the builder is charging a fairly reasonable price up to that cost.
it would certainly tie in with a healthy yield of 5-6% based on todays rental prices
I suppose the point and my hope would be that when any new developments begin in Dublin (land purchased @ non-bubble 2010 prices and built with cheaper labour) that developer for 160k can deliver a 3BedSemi with good margin other people in that area will finally realize the new reality and price accordingly
No doubt others will still think their house is immune to economic gravity
With net migration of 100,000 over a 24 month rolling period identified by the ESRI and NAMA prepared to knock buildings, the pertinent statement: “Ireland is built” has never been truer.
100 unit developments? To what end? In whose interest?
That’s why they won’t be built… There’s no margin in it, the Councillors will protect their interests so nothing’s going to get zoned and NAMA will be looking at shifting what it’s got…
A birth rate of 75,000/annum
An increasingly elderly population more likely to live alone
An average household size that is one of the largest in Europe, but which has been decreasing for the last 20 years.
Internal migration of people to areas with better economic prospects
The influence of large employers on a local area
The removal of old housing stock
The need for energy efficient housing stock
The need for densification of existing population spreads
Climate change making many houses uninhabitable due to increased frequency of flood/storm events
No, it’s not in the short term, but just like the boom didn’t last forever, this won’t either.
