Building costs will not spike after this crisis, says Nowlan
HIBERNIA Reit, one of the country’s biggest commercial property developers, has said building costs will not rise dramatically as a result of Covid-19.
Kevin Nowlan, the chief executive of stock marketlisted landlord and developer Hibernia Reit, said yesterday that it was not budgeting any additional costs for the major project it has under way – a massive office redevelopment at Cumberland Place in Dublin.
“We’re not expecting additional costs, beyond our contingency,” he said.
The need for social distancing may mean construction sites working shifts – potentially three a day – to allow safe distancing, said Mr Nowlan.
That should not add to costs, but will require permanent changes to planning rules that restrict work to business hours, he said.
Outdoor construction, including foundations and steel, will suffer relatively little affects from social distancing but mechanical and electrical engineering work will, he said.
Earlier this month, Tom
Parlon of the Construction Industry Federation said costs could rise as much as 40pc on schemes including the National Children’s Hospital because of increased costs resulting from social distancing and other safety considerations on sites.
Mr Parlon later said that estimate had been too high.
Mr Nowlan said his own company “remains confident” in the long-term prospects of central Dublin’s office and residential market, despite enforced working from home during the Covid-19 crisis. “We believe the current crisis is underlining the importance of city centre offices as places for employees to work together and exchange information and ideas. We remain confident in the long-term prospects of the central Dublin office market and the Dublin residential market and will continue to manage the business accordingly,” he said.
“The full impact of the Covid19 pandemic on market rents and property values is yet to be felt but we are well positioned to withstand it,” he said. This month, 97pc of residential rent due to Hibernia Reit has been paid, in prior months rent collection rates were 99pc or above.
Private landlord Ires Reit has said its occupancy and rent collection levels have remained “strong”, although it cannot currently predict what impact the coronavirus will have on the firm.
We remain confident in long-term prospects of the central Dublin office market