DUBLIN, Ireland: Dublin has been ranked as the second most expensive city for apartment construction among ten major European locations, according to a new report by the Society of Chartered Surveyors Ireland (SCSI) and Trinity College Dublin.

The study found that building an apartment in Dublin costs 2,363 euros per square meter, significantly higher than the average 2,057 euros per square meter across the surveyed cities. Only Zurich, Switzerland, was more expensive, with construction costs reaching 2,866 euros per square meter.

At the opposite end of the scale, Tallinn, Estonia, had the lowest construction costs, at 1,367 euros per square meter, followed by Belfast at 1,755 euros per square meter.

The report used International Construction Management Standards (ICMS V3) to compare construction costs across different markets. It used a standardized model of a seven-storey, 39-apartment block for analysis, ensuring a like-for-like comparison.

Ronan Lyons, Associate Professor of Economics at Trinity College and a co-author of the report, said Dublin's high construction costs are a major barrier to new housing supply.

"For some time, we have known that Dublin is an expensive place to build housing, with costs per square meter high compared to peer locations," he said.

The report found that structural works in Dublin, such as concrete-related construction, are relatively cheaper than in other cities. However, Dublin's overall costs are driven up by high expenses in two key areas: Services and equipment (including heating, power, and elevators) and non-structural works (such as flooring, windows, and carpentry)

According to Lyons, labor-intensive elements have a greater impact on construction costs than material prices, which remain more consistent across markets.

The report highlights that VAT significantly contributes to Dublin's high costs. If VAT rates were removed, Dublin would drop to the fifth most expensive city, with costs similar to those in British cities.

While the study does not propose eliminating VAT, Bryn Griffiths, Vice Chair of the SCSI Quantity Surveying Professional Group, said policymakers should examine alternative models for land delivery seen in other European countries.

"By doing this, we believe it could identify new models for the more cost-effective delivery of key road and utility connections," Griffiths said.