This report presents an analysis of the proposed property development in Dundalk, County Louth in Leinster province, Ireland. The analysis is done by considering several factors including site cost (the cost of land) and both hard and soft building costs. The report then examines if the project is economically viable by comparing the total cost of the proposed development with that of another property that is located within a radius of 1.8 kilometers to the proposed property. The property being compared is similar to the proposed property in location, design, size and use.
Calculations in this report have been done by following the cost guidelines in the Society of Chartered Surveyors Ireland’s (SCSI) “The Real Cost of New House Delivery 2016” report for constructing a three-bedroom semi-detached house in greater Dublin area in 2016 (Society of Chartered Surveyors Ireland, 2017). Since the cost of construction is different in Dublin and Dundalk, the total cost of construction of the proposed property in Dundalk has been reduced because elemental cost of construction in Dublin is higher than that in Dundalk.
The report has also identified several properties sold in Dundalk for the period starting January 2017 to December 2017. The average price of these properties has been determined and used to establish the proposed development’s economic viability. Additionally, suitability of the data gathered has been examined to establish if the data is comparable.
Site Address: Avenue Road, Dundalk, Co. Louth
Geographical location: Located off Avenue Road
Nearby features and amenities: Sloanes, Conlon’s Food Hall, Dundalk Institute of Technology, Marshes Lower, Marches Shopping Centre, Louth County Museum, Emerald Casino, Dundalk Windmill, Ice House Hill Park, St. Mary’s College Grounds, etc.
Setting: urban
Site area: 0.08 acres (hectares)
Floor area: 162m2
Front orientation: West
Rear orientation: East
Topography: Level site
House type: Detached
Number of bedrooms: 4
Site features: great central location, full planning permission, all services and town centre amenities nearby, and off road parking.
Water: municipal supply
Selling Agent: Property Partners Laurence Gunne
PRS License Number: 001699 (Draft Media Limited, 2018a)
Contact Name: Stephen Gunne
Asking price: €70,000
More details about the map view and satellite view of the site are provided in Appendix 1 and 2.
Full planning permission has already been issued for the construction of a four-bedroom house at Avenue Road, Dundalk, Co. Louth. SCSI publishes annual report on the construction cost of different types of houses in different parts of Ireland. As stated before, the report used is entitled, “The Real Cost of New House Delivery 2016”, which was published by SCSI in May 2016. Elemental costs in this report have been reviewed and used to estimate construction cost of the proposed property. These elemental costs have also been adjusted so as reflect the difference in construction cost in greater Dublin area and Dundalk. Dublin being a more developed area, cost of construction is generally higher than that in Dundalk.
The total cost of construction of the proposed property in Dundalk is €300,000. Breakdown of this cost is provided in Appendix 3. This cost includes hard costs and soft costs. Hard costs comprise of the actual cost of construction, such as cost of materials, labour and plant/equipment (Boova, 2018), while soft costs include value added tax (VAT), fees (design fees, legal fees, management fees, financing costs and insurance), levies (administrative expenses) and profit margins (Sherman, 2018). The construction cost in SCSI report is based on a three-bedroom semi-detached house with a total floor area of 113m2 while the floor area of the proposed four-bedroom house is 162m2. T is quite challenging to compare the construction cost of these two houses considering that one is a three-bedroom semi-detached house (i.e. one with three exposed sides) while the other is a four-bedroom single house (i.e. one with four exposed sides). The exposed perimeter of the later is definitely larger than that of the former. The size of the proposed site is 0.08 acres (323.75 m2). This means that the cost of boundaries and landscaping for the proposed house will be higher than that of the property in Dublin.
As mentioned earlier, construction cost in Dublin is higher than that in all other parts of the country. This is because Dublin is the capital city of Ireland hence the cost of living and property prices are high, resulting to high site costs, material costs, labor costs, finance costs and development costs (McGrath, 2016). All these costs raise the cost of constructing a house in Dublin. For this difference to be reflected, the elemental costs were adjusted for each square meter. Generally, it was estimated that the rebuilding cost in Dublin is 21.62% higher than that in Dundalk, which is in northeastern Ireland (The Editors of Encyclopaedia Britannica, 2013). This is shown in Appendix 3.
The average minimum costs of rebuilding a standard three-bedroom semi-detached house in different parts of the country are as shown in the table below (Society of Chartered Surveyors Ireland, 2016).
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|
Area |
Total cost |
Cost/sq. ft. |
|
Dublin |
€181,071 |
177 |
|
North East |
€146,289 |
143 |
|
Cork |
€142,197 |
139 |
|
Galway |
€140,151 |
137 |
|
Limerick |
€138,105 |
135 |
|
Waterford |
€135,036 |
132 |
|
North West |
€117,645 |
115 |
To determine the economic viability of the proposed residential development property and if the property will be sold at a profit, a similar property that was recently listed or sold in close proximity to the proposed site was reviewed. Details of the property are as follows:
Site Address: 8 Tudor Grove, Mullagharlin Road, Dundalk, Co. Louth
Geographical location: Located off Mullagharlin Road
Nearby features and amenities: Windsor Bar and Restaurant, Jade Garden, The Pirates Den, Kingfisher Restaurant, Dundalk Institute of Technology, The Market Bar, Gourmet Palace Dundalk, Crowne Plaza Dundalk, The Jockeys Bar, Th Century Bar and Restaurant, Ice House Hill Park, Finnibair Industrial Park, etc.
Setting: urban
Site area: N/A
Floor area: 159.33m2
Front orientation: West
Rear orientation: East
Topography: Level site
House type: Detached
Number of bedrooms: 4
Site features: great central location, full planning permission, tranquil surroundings, all services and town centre amenities nearby, and off road parking.
Water: municipal supply
Selling Agent: DNG Duffy
PRS License Number: 002108
Contact Name: Jim Duffy
Asking price: €335,000
The property is almost ready for occupation and it was last updated online on April 19, 2018. The house is energy efficient and is 2 minutes’ drive away from M1 motorway. Views of the house are provided in Appendix 5 (DNG Duffy, 2018a).
The two properties are within a radius of 1.8km, as shown in Figure 1 below. They have several similar features such as location (Dundalk), internal floor area (162m2 and 159.33m2), number of bedrooms (4), number of bathrooms (2), and estimated price (€321,660.03 and €335,000). Therefore it is reasonable to compare these two properties.
According to the latest report by SCSI, values of four-bedroom detached houses are expected to rise by 7% in all regions across Ireland during 2018 (Society of Chartered Surveyors Ireland, 2018). The demand for residential properties is also rising, which is evidenced by the increasing number of planning permissions that have already been issued in the region. Supply for new 4/5 bedroom detached houses is projected to be 45% less than demand in 2018. Dundalk boasts of numerous enviable shopping facilities, sporting facilities and clubs, restaurants, pubs, cafes, cinemas and theatres, etc. It is also known as an industrious town and a technology hub with multinational offices such as EBay and Paypal (DNG Duffy, 2018b). All these make the proposed project economically viable.
The proposed house is suited for both young and mature couples. A couple with a combined salary of and €66,000 can afford this property. The median house price in Leister in 2017 was €199,783. The cost of the proposed dwelling is €321,660.03, which 1.61 times more than the median house price. There are several other similar properties in the region that have been either listed or sold. A 4 bedroom detached house with a floor area of 171m2 off Blackrock Cove in Dundalk is going at €365,000 (DNG Duffy, 2018c), another 4 bedroom detached house with a floor area of 158.12m2-167.13m2 off Carrick Road in Dundalk is going at €345,000 (DNG Duffy, 2018d), and another 4 bedroom detached house off Point Road in Dundalk is going at €365,000 (Draft Media Limited, 2018b).
The price of the proposed house (€321,660.03) is less than that of the two similar houses that have been compared with (€365,000, €345,000 and €365,000). Therefore the project is viable and it is likely to be sold faster because it is relatively cheaper than similar projects in the region.
The data that has been used to estimate the price of the proposed house at Avenue Road, Dundalk, Co. Louth was adequate. For instance, the price of land is the one provided by a licensed property agent in the area. The total cost of the house was calculated using the data and guidelines provided by SCSI when computing the cost of a three-bedroom semi-detached house in Dublin. Since construction cost is higher in Dublin than in Dundalk, it was important to apply an adjustment factor of 21.6%.
Nevertheless, it is not easy to compare the price of detached and demi-detached houses. The site size and specific features of the two houses were also different. This property was also compared with anther similar listed property within a radius of 1.8km. The property has an internal floor area of 159.33m2 and its asking price is €365,000, while internal floor area of the proposed house is 162m2 and its cost is estimated to be at €321,660.03. It is not very precise to compare the two properties because they have different gross internal floor area and other features such as garage, internal finishes, kitchen appliances, etc. For this reason, it is recommended to have an adjustment factor so as to come up with a more precise estimating of the proposed house.
Conclusions
The median house price in Leister province in 2017 was €199,783 while the cost of the proposed house is at €321,660.03, which is 1.61 times more than the average house price in the region. However, the €199,783 includes the prices of different sizes of houses including 1, 2, 3, 4 and 5 bedroom houses.
A similar property in Dundalk within a radius of 1.8km but with a larger gross internal floor area by 2.67m2 was compared with the proposed property. The asking price of the other property is at €365,000, which is 11.9% higher than the price of the proposed development. Statistics show that prices of 4 bedroom houses in the region are rising progressively and supply of these houses is 45% less than demand. Dundalk is experiencing a steady economic growth and the property should be affordable to any young or mature working couple. Considering all these factors, the proposed project is economically viable and it is expected to attract more buyers and be sold faster.
References
Boova, K., 2018. Costs to Consider: Hard Costs vs Soft Costs. [Online] Available at: https://watchdogpm.com/blog/costs-to-consider-hard-costs-vs-soft-costs/ [Accessed 23 April 2018].
Clancy, M., 2015. Stamp Duty Explained. [Online] Available at: https://www.daft.ie/blog/stamp-duty/[Accessed 23 April 2018].
DNG Duffy, 2018a. 8 Tudor Grove, Mullagharlin Road, Dundalk, Louth. [Online] Available at: https://www.duffyproperty.ie/residential/brochure/4221503 [Accessed 24 April 2018].
DNG Duffy, 2018b. Mount Hamilton (Type J3), Carrick Road, Dundalk, Louth. [Online] Available at: https://www.duffyproperty.ie/residential/brochure/3821909
[Accessed 23 April 2018].
DNG Duffy, 2018c. 1 Marine Avenue, Blackrock Cove, Blackrock, Louth. [Online] Available at: https://www.dngduffy.ie/residential/brochure/4107371 [Accessed 24 April 2018].
DNG Duffy, 2018d. Mount Hamilton (Type K), Carrick Road, Dundalk, Louth. [Online] Available at: https://www.dngduffy.ie/residential/brochure/4104793 [Accessed 24 April 2018].
Draft Media Limited, 2018a. Avenue Road, Dundalk, Co. Louth. [Online] Available at: https://www.daft.ie/louth/sites-for-sale/dundalk/avenue-road-dundalk-louth-1527212/[Accessed 23 April 2018].
Draft Media Limited, 2018b. 8 Waterview, Point Road, Dundalk, Co. Louth. [Online] Available at: https://www.daft.ie/louth/houses-for-sale/dundalk/8-waterview-point-road-dundalk-louth-1683055/[Accessed 24 April 2018].
McGrath, M., 2016. Surveyors Break Down the Cost of Building a Three-Bed Semi D in Dublin. [Online] Available at: https://www.independent.ie/irish-news/surveyors-break-down-the-cost-of-building-a-threebed-semi-d-in-dublin-34726020.html[Accessed 23 April 2018].
Sherman, F., 2018. What Are Hard & Soft Costs in Constructon?. [Online] Available at: https://bizfluent.com/info-8124694-construction-hard-costs-soft-costs.html
[Accessed 23 April 2018].
Society of Chartered Surveyors Ireland, 2016. New Guide to House Rebuilding Costs Published. [Online] Available at: https://www.scsi.ie/news/view?id=78 [Accessed 23 April 2018].
Society of Chartered Surveyors Ireland, 2017. The Real Cost of New House Delivery 2016, Dublin: Society of Chartered Surveyors Ireland.
Society of Chartered Surveyors Ireland, 2018. Annual Residential Property Review & Outlook 2018, Dublin: SCSI.
Society of Chartered Surveyors Ireland, 2018. House Rebuilding Calculator. [Online] Available at: https://www.scsi.ie/advice/house_rebuilding_calculator
[Accessed 23 April 2018].
The Editors of Encyclopaedia Britannica, 2013. Dundalk. [Online] Available at: https://www.britannica.com/place/Dundalk[Accessed 23 April 2018].
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