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Call for action as Cork awaits first major apartment project in 13 years

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Call for action as Cork awaits first major apartment project in 13 years

Eddie O'Hare

Call for action as Cork awaits first major apartment project in 13 years
July 15
14:00 2021

Regeneration and rejuvenation of city centre areas will fail to occur without major Government intervention, according to leading figures in the construction and business sector.

Cork Chamber, the Construction Industry Federation (CIF) and KMPG have published a report on private apartment development in urban locations, highlighting that Cork has not seen the creation of any private apartment schemes of scale since 2008.

The report proposes a reduction to the rate of VAT on residential construction activity to 5%, the creation of an urban housing investment fund and the utilisation of the Urban Regeneration and Development Fund.

It also proposes a minimum tax depreciation of 4% per annum for apartment developments and for private investments in the build-to-rent and private rental sectors to be recognised for gift/inheritance tax purposes.

Lack of viability

Cork Chamber chief executive Conor Healy said they recently saw a very significant apartment development in Cork Docklands fail to get off the ground because of a lack of viability.

The decision was made by the developer not to go ahead because of the lack of viability. It just wasn’t possible to undertake that development and generate any level of return or develop apartments that would be affordable for the end-user.

“That is a major concern – to have a project that had been positioned to move ahead be withdrawn and now looking to be converted to office accommodation, which is in itself needed but we equally need those apartments.”

Mr Healy said to deliver on Ireland 2040 and the National Planning Framework 25,000 people must live in the docklands alongside 29,000 new jobs.

“But it will remain a vision on paper only if action is not taken to make apartment living viable and affordable. Ninety five per cent of Chamber members support time-bound tax interventions to stimulate apartment construction. 

“We are calling on Government to implement the findings of this critical report in the forthcoming Housing For All strategy and Budget 2022.”

Lower VAT rates

Partner at KPMG Michael Lynch said lower VAT rates have worked in terms of residential construction in countries such as Hungary, Portugal and in a pre-Brexit UK.

“These are the types of changes that are feasible, can be delivered on and will make a real difference.

“It is clear from our analysis of the Irish and international markets that countries that recognise and act on the issue of viability can deliver apartment communities in urban centres. 

It is essential that non-fixed costs such as tax and access to capital are resolved to bring momentum to this sector. Our five recommendations are key to unlocking this potential.” 

Meanwhile, Conor O’Connell, director of the Construction Industry Federation Southern Region, said major regeneration in urban areas has always required the intervention of Government to help brownfield locations to develop high-density residential accommodation.

He maintains delivery of urban homes is critical to investor confidence, talent attraction and city vibrancy.

“With housing delivery falling short of demand, and a stark gulf between planning approvals and actual construction, the need to enable apartment development has never been greater. 

Housing delivery must strike a balance of social, affordable and private and in modern society, it is clear that this blend must include substantial numbers of apartments.” 

Source: The Irish Examiner

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