The number of residential commencement notices lodged in Ireland in 2021 was above pre-pandemic levels, according to a new report from Deloitte.

Deloitte Ireland’s latest Real Estate Planning & Development Statistics report shows that commencement notices were lodged on 24,304 units in 2021, in residential schemes comprising more than 20 units. Deloitte notes that historically, approximately 5,000-6,000 units are commenced annually under this threshold, and so estimates an adjusted figure of 30,304 total unit commencements on residential schemes in 2021. This is an increase of 40% on 2020, when there was a total of 21,686 commencements and a 16% increase on 2019, when there was a total of 26,237 commencements.

Commenting on the report, John Doddy, Deloitte Real Estate Sector Lead said: “The increase in commencements between 2020 and 2021 is not surprising given the impact of lockdowns on 2020 levels; 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.”

The average time taken to secure planning permission for residential schemes across Ireland in 2021 was 187.5 days. This improved throughout the year, with an average of 208 days in Q1, 190 days in Q2, 172 days in Q3 and 180 days in Q4. “Although the time taken for grants of planning permission has been an issue for developers since the beginning of the COVID-19 pandemic, Q3 and Q4 2021 represent an improvement on the first half of the year. Unfortunately, for many Strategic Housing Developments this timeframe has been a minimum due to a huge increase in the number of Judicial Reviews nationwide,” said Doddy.

Residential market

The mix of residential unit types commenced in 2021 indicates that the number of housing units heavily outweighs the number of apartments. Of the 24,304 units (in schemes of 20+ units) that were commenced in 2021, housing made up 15,715 (65%), with apartments making up 6,691 (28%). A further 1,898 units (8%) are unclassified in planning documents, with the majority assumed to be apartments within mixed-use schemes.

“This large split is likely due to the number of apartment schemes being held up by Judicial Reviews, but also reflects viability issues outside of cities and with brownfield sites in urban areas, which are costlier to build on,” said Doddy.

In terms of regional spread, Dublin represented 54% of residential units for which planning applications were submitted in 2021, 57% of units for which planning permission was granted and 41% of units for which commencement notices were lodged. Cork made up 10% of units for which planning applications were submitted, 6% of units for which planning applications were granted and 11% of units which were commenced in 2021. The rest of Ireland made up 36% of units for which planning applications were submitted, 37% of units for which planning applications were granted and 48% of units which were commenced.

Commercial market

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.

While the number of commercial planning applications lodged in Dublin remained steady throughout 2021, there was a noticeable increase in applications lodged in the rest of Ireland in the second half of the year, particularly outside of the main cities. Of the 25 commercial applications lodged in Ireland in 2021, 11 were in Dublin, 2 in Cork, and the remaining 12 outside these cities.

The number of schemes granted planning permission in Dublin substantially reduced over the year, with eight schemes granted permission in Q1, a further eight in Q2, five in Q3 and just one in Q4. “This may be due to the comparatively higher volumes of planning applications across the end of 2020,” Doddy commented.

The commercial sector had a strong finish to 2021, with 40% of all office transactions from 2021 taking place in Q4. “This is partly due to sites being completed in Q4 that had been delayed due to COVID-19 closures,” said Doddy.

“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.

“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.”

Industry focus

In the retail sector, community shopping centres and retail parks performed stronger than high-street stores in 2021, 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.”

In the industrial and logistics sector, the report notes a 20% reduction in available space for new buildings in or near Cork, Dublin, Limerick and Galway.

In the hospitality sector, there is a disparity in occupancy rates between Dublin and regional hotels – regional hotels saw 52% occupancy for the year, with occupancy at 38% among hotels in Dublin (compared to 31% in 2020).

Doddy concluded: “Many industry participants hope that recent inflation in costs will be temporary and somewhat tempered during 2022, as production and demand become more balanced. This would be good news, but inflation remains a problem for those traders working on fixed-price contracts that may have been priced 12 or 18 months ago, and it also creates a challenge for developers seeking to agree prices for new projects.

“The government’s Housing for All Plan has set a target of 24,600 new homes in 2022 and, given the level of completions in the two previous, hampered years – 20,433 in 2021 and 20,526 in 2020 as per recent CSO data – there is cause for optimism. The pipeline of schemes that have been granted planning permission is also looking healthier. Overall, 2021 – albeit a year challenged by COVID-19 restrictions and supply issues – showed signs of positivity and recovery.”

 

Residential market (20 units+)

	Q3 2021	Q2 2021	Q1 2021	Q4 2021	Total 2021
Applications submitted	130 schemes 16,222 units	159 schemes 13,967 units	77 schemes 9, 612 units	160 schemes 19,969 units	527 schemes 59,835 units
Planning granted	89 schemes 18,993 units	102 schemes 11,438 units	70 schemes 8078 units	109 schemes 12,944 units	370 schemes 42,453 units
Commencement notices lodged	67 schemes 6,883 units	109 schemes 10,999 units	32 schemes 1764 units	63 schemes 5,692 units	270 schemes 24,304 units

 

Office market (10,000 sq. ft+)

	Q3 2021	Q2 2021	Q1 2021	Q4 2021	Total 2021
Commencement notices lodged	6 developments	5 developments	4 developments	5 developments	20 developments
Planning granted	7 developments	10 developments	12 developments	3 developments	32 developments
Applications submitted	7 developments	8 developments	5 developments	5 developments	25 developments