Residential commencements last year topped 2019 levels
Residential development commencements jumped 40% last year compared with 2020, and were 19% higher than pre-pandemic levels in 2019 – according to new figures from Deloitte Ireland.
The data shows that commencement notices were lodged on 24,304 units last year, in residential schemes of more than 20 units.
However, Deloitte estimates that around 6,000 units were commenced under this threshold, bringing the total commencements on residential schemes in 2021 to 30,304.
There were 21,686 commencements in 2020 and 26,237 in 2019.
“The increase in commencements between 2020 and 2021 is not surprising given the impact of lockdowns on 2020 levels,” said John Doddy, Deloitte Real Estate Sector Lead.
“However, the increase on 2019 levels is noteworthy, and welcome, given that lockdowns and cost increases have resulted in Ireland’s housing stock availability being at its lowest point in recent history,” he said.
The average time taken to secure planning permission for residential schemes across Ireland last year was 187.5 days.
This improved throughout the year, with an average of 208 days in the first quarter, 190 days in the second quarter, 172 days in the third quarter and 180 days in the fourth quarter.
“Although the time taken for grants of planning permission has been an issue for developers since the beginning of the Covid-19 pandemic, the third and fourth quarter of 2021 represent an improvement on the first half of the year,” Mr Doddy said.
The figures show that the number of housing units commenced last year heavily outweighed the number of apartments.
Of the 24,304 units commenced in schemes over 20 units, 65% were houses and 28% were apartments.
A further 8% are unclassified in planning documents, with the majority assumed to be apartments within mixed-use schemes.
41% of the units for which commencement notices were lodged were based in Dublin, 11% in Cork, and 48% in the rest of Ireland.
In terms of the commercial market, the figures reveal that Dublin remained the location of choice for office developments in 2021, with permission granted on 22 schemes, compared to 10 in the rest of Ireland.
“Overall, the quantum of office space required by occupiers appears to have remained stable. However, what has changed is the configuration of these spaces, with much more of a trend towards open plan and a focus on meeting and collaboration spaces,” Mr Doddy said.
“In terms of new development, we are still seeing more limited appetite to fund new, fully-speculative office development, however we expect this to change in 2022 as the vacancy rate continues to fall and the demand for new offices increases. It is anticipated that rents and yields will therefore remain stable into 2022,” he added.
In the retail sector, the data shows that community shopping centres and retail parks performed stronger than high-street stores last year, with Deloitte predicting that this will continue in 2022.
“A key challenge for the high street is that the strength of the covenants and lease terms have changed significantly,” said Doddy.
“We’ve seen a change in the types of leases available in high-street retail, with tenant-friendly terms such as short-term deals, increased rent-free incentives and more regular break options,” he added.