Amid Ireland's housing crisis, the demand for residential properties is soaring, placing developers and investors under tremendous pressure to provide much-needed housing solutions.
However, despite burgeoning demand, factors such as increased construction costs, prolonged delivery times and potential changes to planning legislation, including a proposed - albeit delayed - levy on concrete products, have contributed to investor uncertainty in 2023.
Setting the Scene
The aftermath of COVID-19 and the war in Ukraine have created a ripple effect of supply chain disruption, causing material costs to rise sharply. Additionally, pent-up demand for construction services has driven prices upwards, and labour costs are growing in a tightening market.
Nonetheless, there is a reason for optimism, as EY's Economic Advisory predicts that construction inflation will average 6.0% in 2023, signalling a return to more stable economic conditions.
Even more promisingly, the foundation of the Irish economy remains robust despite the hurdles. With a 73% employment rate, a highly educated workforce, and the distinction of being the only native English-speaking country in the EU, Ireland continues to attract substantial foreign direct investment.
Forecasts continue to indicate economic growth for Ireland in 2023, reinforcing its position as one of the EU's most robust economies.
Navigating the Risks and Rewards
With the demand for housing increasing 17% year on year, there are undeniably opportunities for investors and developers. However, they are still right to exercise caution.
The landscape, after all, is still fraught with economic uncertainties, volatile material costs and a scarcity of skilled labour, all of which can substantially hinder project success and amplify the risks of loan defaults and insolvencies. The stakes are undeniably high, but the potential rewards are equally compelling.
With that in mind, developers and investors must collaborate with a reputable construction consultancy, proficient in project management and fund monitoring services, to overcome the challenges and maximise the opportunities.
Your Trusted Advisor
Development due diligence and monitoring are pivotal in scrutinising and managing risks for clients exposed to development challenges stemming from third parties. That’s where we can be of great assistance.
At Duke McCaffrey, we pride ourselves on serving project funders, investors, and joint venture partners.
Our expertise empowers banks and funds to provide development finance confidently while our deep knowledge of leasing practices and institutional investment-quality buildings enables us to assist investors in developing projects that deliver social and long-term value.
Furthermore, our experience in the role of fund monitoring provides our client base a head start when it comes to drawdown stage as we are acutely aware of the project information that fund monitors require for the project funders. By managing this process on behalf of our clients we prevent unnecessary strain been borne on our client during a particularly pressurized stage of developments.
Looking to the Future
In conclusion, while the landscape of residential property development in Ireland poses both risks and rewards, we can guide you confidently through the intricacies of development, protecting your interests, adding value, and accelerating project completion.
Find out more about our fund monitoring services today.