A sustained pipeline of data centre and commercial property development has made Dublin the fourth most expensive city in which to build in Europe, according to the CBRE-owned professional services company Turner & Townsend.
The firm's Global Construction Market Intelligence report shows average construction costs in the capital are now €3,692 per square metre, placing Dublin behind only Zurich, Geneva, and London, where construction costs €4,977 per square metre.
The study attributes the expense of building in Dublin to investment in data centres and commercial property as well as mounting pressure from the government's pledge to deliver more than 300,000 new homes by the end of the decade.
It also points to skills shortages, digital adoption gaps and regulatory hurdles as growing risks that could further hinder delivery and make construction more expensive.
“While Ireland’s construction market shows resilience and sustained demand, particularly in high-tech and residential sectors, cost pressures and structural challenges threaten to limit capacity just when it’s most needed,” said Philip Matthews, managing director at Turner & Townsend Ireland.
Despite concerns about pressure on the national grid, demand for data centre continues to rise and especially as adoption of artificial intelligence drives European digital infrastructure needs.
The latest figures from the Central Statistics Office indicated that data centres consumed 22 per cent of Ireland's total metered electricity in 2024, up from five per cent in 2015. By comparison, all urban homes in Ireland accounted for 18 per cent.
Metered electricity consumption by data centres increased 10 per cent to 6,969GWh last year while consumption by all other residential and business users increased by three per cent.
The Turner & Townsend report also forecasts that regional inflation in Ireland will decline from 2.9 per cent to 2.4 per cent this year, offering some short-term stability.
All European markets reported insufficient mechanical, electrical and plumbing labour availability, reducing the capacity of the Irish construction sector.
Furthermore, less than half of Irish clients are currently pursuing digital transformation or building information modelling, compared with a majority of companies in Zurich, Geneva and Copenhagen.
Overall, more than six in ten (62.5 per cent) European respondents cited bureaucracy and delayed approvals as a large or major constraint, and a similar level of Irish respondents agreed.
"Despite these challenges, the report highlights balanced market conditions in
Ireland, with competitive tendering activity indicating continued investor confidence. Ireland’s challenge now is to build smarter, not just more," added Matthews.
"Targeted upskilling, streamlined planning, and faster adoption of digital tools like BIM are essential if we are to match ambition with delivery."
The latest AIB construction PMI found on Tuesday that construction output declined at an accelerated pace in June, driven by contraction in housing and civil engineering sub-sectors. Commercial was the sole source of growth month-on-month.
(Pic: Getty Images)
