Inside Business with Ciaran Hancock
Has the Irish building sector got themselves hooked on Government subsidies?
24 Jun 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
Hello, I'm Ciarán Hancock. Welcome to Inside Business. This week I'm talking to the Irish Times' new recruit, Cillian Woods, about a government scheme to support the building of apartments in our cities, which looks set to miss a key target. You'll hear from Cillian in a few moments.
And in the second half of the programme, Eoin Amara Walsh, the CEO of the Irish Tourism Industry Confederation, explains why the country is in danger of not having enough bedrooms to accommodate tourists.
Chapter 2: What is the government scheme for apartment building in Ireland?
First to apartment building. Cree Quineha Cities is a government support scheme to help plug the affordability gap to support apartment building, which is a key plank in the state's plan to solve the housing crisis.
Earlier this week, Cillian Woods wrote a story in the Irish Times stating that the scheme was in danger of missing a key target of building 5,000 new apartments over the lifetime of the programme. He joined me in studio to explain why. Here we go. So, Cillian Woods, welcome to Inside Business. It's your debut having joined the Irish Times from the Business Post. Yeah, I'm looking forward to it.
Yeah, good.
Well, wait till the end of the interview before you say that. Now, you were writing a very interesting story just a few days ago about Cri Quineha, the scheme that the government launched in 2022 to try and help bridge the gap between how much it costs developers to build an apartment and the price that owner-occupiers can afford to pay for those apartments.
And a budget was set aside and the hope was to build 5,000 apartments. But it seems we're way off beam in terms of the number of apartments that have been built for the money that's being spent. So another example of a government funded project that's gone over budget, if you like.
Just to set the scenes, but there's, yeah, Creecon is what, we're talking about Creecon as cities here and there's Creecon as towns. There was two wings of this scheme, which was both aimed at trying to get, one was getting apartments built, the other one was bringing vacant homes in towns back to use. It's kind of confusing to have two completely different schemes.
Okay, we're talking about the city's one. But the city's one is. Yeah, so it is another case of the government, I suppose this was a scheme introduced to try and chase apartment costs in a way that maybe they wouldn't put it that way in their own description of it. But apartment costs have gone through the roof. That's from a number of different reasons.
That's because building them has gotten very expensive just for raw materials. Borrowing costs have gotten very expensive. Interest rate hikes also made them very, very expensive to build. Is it because the builders are paying too much money for the land? That might be the case now.
There's definitely apartments still being built on land from back in the nowadays when some of the big builders would have gotten very good deals on the land to build on, shouldn't be facing those high building costs as opposed to land. But really, they say it's the raw materials, it's the inputs that are really going up and flying up.
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Chapter 3: Why is the Cri Quineha cities scheme at risk of missing its targets?
What traditionally have been seen as maybe a lesser product to a house, especially when you're talking about like whatever about... And what's that, a one, two, three bed for 600k?
That would be a two bed, just a normal size, not a small two bed, just a normal size, regular run-of-the-mill two bed apartment with decent spec because that was considered in the spec for when they were doing that research into how much it would cost to build apartments. So they were looking at outside of the M50 for not even necessarily a good location, like 550 grand to build an apartment.
The state's Cree Connell scheme was aimed to come in and bring, if we're talking about Dublin, bring the cost down by about 120 grand. So do the math, that's bringing it down to what they would deem an affordable level of people, or not necessarily affordable, but a price people can afford to pay or would pay, not necessarily affordable, they're very different things.
So the state set aside €450 million for the city's scheme with a view to constructing 5,000 apartments. So that would suggest €90,000 on average. Yes. So what's been the actual outcome?
The problem is that they haven't come in at €90,000 on average. What we're looking at at the moment is the apartments that have gone through the schemes, €320 million is spent. That's 70%, roughly 71% of the budget, but we're getting about half the output, €2,600 of the 5,000 apartments.
which means that they're running ahead of budget, as opposed to necessarily that they have completely run over budget, not completely over the £450 million, but they're on track to not be able to fulfil the 5,000 orders. They're not going to build 5,000 apartments for £450 million.
Which was probably never realistic considering, even if there was modest inflation in the property market, even if there was modest inflation, there was no chance of £500 million back when they announced it in 2022. It was, and that shows how different, I suppose, how big the changes can be in the property market and how much the raw material prices can go up.
This is a classic case that probably should have been left under review and that maybe that £450 million wasn't ever going to be enough to build enough apartments. Or it's another case where the government, if I was my own analysis of it, is that they are chasing apartment costs by putting this there.
They are, as opposed to trying to bring the apartment costs down, they're trying to bring the state and the buyers up to the level that that can actually be for to pay the apartments. Whereas addressing the cost is really what is the underlying issue. And you can see that there's more of an outright statement for the government at the moment than the state saying,
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Chapter 4: How does the budget allocation affect apartment construction?
about how they're going to cut cost of building. I mean, I'm not necessarily confident that the builders feel that all their costs are kind of locked in and that it's taxes are really what they feel the government can make some headway on if they were to cut cost of building or delivering homes. And the cost of building is just stuck where it is.
So we've likely to expect to see the quick kind of wound down once it's spent or once it's tipped toward this 450 million budget, but falling way short of 5,000 units.
Okay, so how many more homes can they build for the remaining 130 million?
The math off the top of my head is not very good. A thousand or so? Maybe a thousand, yeah, at this rate, because they're also factoring in. There's more inflation since the first four rounds of apartments were applied for and secured the money, so it's going to get less and less cost-effective as it goes on.
All right, Cillian Woods, thank you for joining us. Thank you. We're going to take a short break now. When we return, I'll be talking to Ona Mara Walsh, the ITIC chief executive, who will explain why we're in danger of not having enough hotel stock to accommodate an increase in visitor numbers. Back in a few moments. Welcome back, this is Inside Business with Ciarán Hancock.
Óna Máire Walsh is Chief Executive of ITIC and he recently wrote an opinion piece for the Irish Times welcoming the government's commitment to increase tourism revenue by 50% out to 2031. But he also warned that there might not be enough bedrooms to accommodate these new visitors.
He joined me in studio to tease this out and I began by asking him to sum up how the tourism industry here has fared so far this year. given the Iran war and also given the fact that last year the CSO reported a slump in visitor numbers. Here we go.
Well, there's still a little bit of misalignment between the CSO data and the industry figures. So the CSO numbers are actually showing a big bounce this year. But if you recall last year, they were recording a big drop that we didn't notice. And this big bounce that they're talking about this year, we're not seeing that either.
So, you know, the CSO may have right-sized their numbers and it's just the comparison metric that's wrong. If we'd been having this conversation two months ago before the Iran conflict, I think there would have been kind of cautious optimism about the year ahead. lots of air access into the country, which is so important to Irish tourism, particularly from the key North American market.
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Chapter 5: What challenges are developers facing in the current market?
So if people have less confidence in the economy or in their pay packet, then often, you know, one or a second holiday gets cancelled and Ireland might miss out as a result. So we're a little bit more anxious about the year ahead. And 2027 is the big unknown. There's a lot of uncertainty in regard to that.
What about the Middle East corridor? Because obviously the Middle East has been directly impacted by what's been going on.
That's the most direct. if you like, impact. So, Emirates, Qatar. Exactly. So, they all obviously fly into Dublin and give valuable business to the Irish tourism economy. It's worth, in a normal year, it's worth about 500 million euro tourism revenue comes either from the Middle East or via the Middle East. And obviously, all that has been utterly kind of messed up.
So, how much of that has been lost or paused or deferred, we just don't know. So, There's the direct impact of the Middle East business, and then there's the more indirect business, which is things like the fuel surcharges, the consumer confidence abroad. So it certainly hasn't been helpful.
Okay. Now, if all of those pressures that you talked about are impacting on people coming into Ireland, you'd have to imagine that it's also impacting on sentiment. leaving Ireland for a holiday. So maybe Irish people aren't taking a second holiday abroad, but maybe they're doing more staycations.
Yeah, and hopefully they are because the domestic market is very important to Irish tourism. But I think the thing we have to remember is that the domestic visitor is only worth about 25% of the overall Irish tourism economy. So the bulk of the Irish tourism economy is made up of international visitation. And the domestic market is important. It helps the shoulder seasons and so on.
But Irish people will always, I think, jet off to guaranteed sunshine and, you know, see new places. So let's keep the domestic market. I mean, one of the good things with COVID was that Irish people began to discover what's on their own doorstep and the hidden gems and the rest.
And I think we need to kind of keep that and do a lot of good work in terms of stimulating demand from the domestic market. But the international visitation is what makes up the bulk of the Irish tourism economy. So keeping the North American market strong, growing more from Europe and getting back some of the lost GB business is very, very important.
I think I saw some data recently suggesting that in Q1 there were more than 9 million people went through Irish airports, which was a record for that period of the year. So the stats can be a bit confusing, can't they?
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Chapter 6: How does the subsidy system impact the building sector?
I mentioned earlier the cost of business pressures that all sectors, but particularly the tourism and hospitality sector is facing. Ireland being the second most expensive country in Europe. Tourism is a very labour-intensive business. Margins are very, very tight. There's a lot of SMEs in the sector. So I think reducing the applicable VAT rate to food services is very welcome.
In fact, I'd like to see it extended to some other tourism sectors such as visitor attractions, adventure centres, camping sites. I'm not talking about it coming back for hotel bedrooms, but I think it could certainly be extended to downstream tourism businesses and it would help those businesses grow. get through what is a challenging time.
It costs a lot of money to run the country, so maybe if you give you a break over here on your food services, you might have to pay a bit more here in terms of a bed-night tax, which at the end of the day is going to be passed on to the consumer.
Yeah, well, as I say, you know, Fortune Ireland data shows that 29 cent of every euro a tourist spends already goes straight back into the Ministry for Finance's wallet. So I think that's enough. And I think we have to be really careful that Ireland is not a cheap destination.
You know, it's a northern European destination in terms of its cost perception, in terms of, you know, the price the consumer pays. We always have to be value conscious. And I think adding tax onto an already highly taxed sector, I think, is counterproductive.
Now, the Minister for Public Expenditure, Jack Chambers, he's backed the idea of a tourism levy to help fund investment in Dublin and other cities countrywide. So... If they were to ring-fence the bed tax, let's say, and they say, OK, we'll spend this on amenities for tourists and visitors to the city, would that not be fair enough?
We certainly have the discussion with them. I think a lot more work needs to be done as to if a bed tax. And remember, you know, we're nearly being premature to a certain extent because the government, central government has to introduce legislation to allow local government to apply a bed tax. So there's a bit to go in this yet. And our minister.
We haven't seen the design.
Exactly. Our minister, the minister, Peter Burke, as we were talking about earlier, is against us, that he's been publicly against us. So, you know, if there is a bed tax and, you know, it's a big if, it has to be designed very carefully and would have to be ring fenced for tourism and the public realm. It couldn't just go into the black hole.
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