The cost of building in Dublin is set to rise by a further 7% this year as the ongoing boom in the development of offices, student accommodation and the rapid growth of the build-to-rent (BTR) residential sector continue to put pressure on labour and resources.
That's the key finding of international professional service company, Turner & Townsend's International Construction Market Survey for 2018.
The predicted hike in construction costs comes off the back of an 18% expansion in construction activity recorded in the capital in 2017.
As one of the world's 'hot' markets, characterised by a large number of construction projects driving up prices, Dublin now ranks as the sixth most expensive place globally to build according to the survey, with average construction costs of €2,608 per square metre.
New York City remains the most expensive location, with the average cost of construction in the city climbing 3.5% to €3,276 per square metre in 2018. New York is followed by San Francisco (€3,139 per sq m), Hong Kong (€3,111 per sq m), Zurich (€3,068 per sq m) and London (€3,039 per sq m).
The Turner & Townsend survey analyses input costs - such as labour and materials - and charts the average construction cost per square metre for commercial and residential projects in 46 markets around the world.
Commenting on Dublin's ranking in the report, Mark Kelly, managing director for Ireland at Turner & Townsend, said addressing skills shortages was key to managing cost inflation.
"Strong GDP growth supported by increasing domestic demand for new development has driven a surge in construction activity in Dublin which puts pressure on prices," he said.
"With major commercial projects under way, including the €700m National Children's Hospital, the DIT's €200m Grangegorman campus project and Ballymore's Capital Docks scheme in the Dublin Docklands, this trend looks set to continue for the foreseeable future."
Mr Kelly added: "Natural cost inflation is being exacerbated by skills shortages.
"We need to look at how we incentivise investment in new methods of construction, including automation and offsite manufacture, so that we can both supplement a diminishing onsite workforce and also attract the new talent and skills that we need to modernise the sector."
It's understood that spiralling construction costs could have a detrimental effect on Ireland's economic competitiveness.