New apartments are needed to meet the demands of a growing population and to stop the spread of housing developments across the countryside, says Ken MacDonald, managing director of Hooke & MacDonald.

The first apartments to be offered for sale in Ireland were built in Dublin in 1970. By 1980 apartments represented 13 per cent of Dublin completions with 682 units. From the outset Hooke & MacDonald, in a series of reports and surveys, advocated the importance of design quality in apartment construction and forecast that apartments held the answer to our housing shortages and,in particular, to urban regeneration.

Three decades later it is encouraging to note that apartments now account for one-in-four of new homes built in Ireland and half of Dublin completions. Some 80 per cent of the record number of enquiries coming into Hooke & MacDonald are for apartments rather than houses.

There are many reasons for this surge in activity and popularity. In the first place, apartments offer a more flexible and attractive lifestyle to single people and couples, whether they are first-time buyers or retirees. These are the main drivers of demand in the new homes market, with 71 per cent of all home buyers nationally being single people (and 75 per cent in Dublin).

Some 43 per cent of our population, aged 15 plus, were classified in the 2002 Census as single, compared to 39 per cent in 1991. The figure is probably now 45 per cent and may well approach 50 per cent before the end of this decade. Yet only 12 per cent of households lived in a purpose-built apartment in 2002. This clearly indicates the huge potential for the future expansion of the apartment market.

One-third of the growth in population since the start of this decade is concentrated within the 25-34 age group - the key house-buying age span for first-time buyers. This trend is due to continue. The population now exceeds four million for the first time since the 1870s and is set to increase by another million over the next 15 years. Up to 60 per cent of this projected growth in population will occur in and around Dublin.

Other reasons for the importance and popularity of apartments is the lifestyle they offer and convenience to places of work and leisure. Increasing frustration with transport delays has made this a significant issue for most people. Also, a shortage of land in urban areas has led the Government and planning authorities to the conclusion that a major housing crisis will only be averted by the promotion of high density residential accommodation, i.e. apartments.

They are finding it harder to face the inevitable reality that tall buildings need to be encouraged in many locations. A recent Hooke & MacDonald survey revealed that there is only enough land left in Dublin City Centre and Docklands for seven more years of construction.

One in five households are privately rented in Dublin. Most tenants prefer apartments and depend on a steady supply of good quality units being available each year. More than 50,000 workers from the 10 new EU member states came in to Ireland between May and December 2004 and at least another 50,000 are likely to arrive this year. Our thriving economy needs these people if it is to continue expanding.

One thousand new jobs are being created each week in Ireland. This is already leading to an uplift in rents and a shortage of supply in key letting locations.

The demand for new residential units, particularly apartments, will be far stronger in the years ahead than most commentators have anticipated. There will be a requirement for more than 80,000 units this year, up from 77,000 last year, rising to 90,000 a year within three to five years.

Talk of a demand for less than 60,000 a year is so wide of commercial reality that, were it to happen, it would cause prices and rents to rise out of control due to the shortages it would create. It fails to take into account that, although we have been constructing a record number of new homes in recent years, we are still only playing catch-up in terms of the number of units per head of population, compared to other countries.

This is a very exciting time to be involved in business life in Ireland, especially the property sector. The country is on the crest of a wave and is being inspired by our brilliant sports stars and achievers in all aspects of Irish life: cultural, educational, commercial, entrepreneurial and professional. Wealth management is becoming one of our greatest challenges.

There is an increasing awareness of the importance of good architecture and design. The quality of our buildings is steadily improving but there is a reluctance to allow creativity and innovation to prosper. An innate conservatism, which once stifled our literary greats, still pervades our thinking and attitudes. Vision is lacking in many areas, none more so than in design and housing solutions. Negativity is often preferred to progress and gets free rein on our airwaves. Local politicians thrive on it, displaying a distinct lack of leadership.

Those who lament the fact that we are no longer building predominantly three and four-bedroom semi-detached houses ignore the fact that our existing housing stock is dominated by these properties and real choice is available.

Up to the 1980s young people had little option apart from semi-detached houses but now they can buy homes that are more suited to their needs, namely apartments or townhouses. To advocate a return to the semis would lead to the Dublin suburbs extending in ribbon development to Waterford, Athlone and Dundalk. What a waste this would be of our most valuable resource: land.

Although this is a very enjoyable time to be involved in the property sector, it is frustrating that various parties regularly make wild predictions about the future of the sector, without any basis in fact, and even when they are eventually proved wrong they are rarely called upon to explain themselves; on the contrary they are often allowed to repeat the exercise.

The more bizarre their prediction the more publicity they get. This causes anxiety to prospective home buyers, particularly first-time buyers, who often delay in buying and end up paying much more than they would have had to in the first place.

There will be few better investments than the purchase of a well-located apartment in the years ahead. Fortunately prices have stabilised and we should have single digit increases over the next five to six years although certain areas, such as the Docklands, could see a doubling in values over the same period.

People often forget the importance of gearing when comparing residential and commercial property investments to other forms of investments. If you invest, say, €50,000 in a property and borrow €200,000 and it increases in value over a period from €250,000 to say €450,000, although the property has increased in value by 80 per cent, your initial investment of €50,000 has increased by 400 per cent. With most other forms of investment it is not generally possible to gear up with borrowings in this way. You can't beat bricks and mortar.

Ken MacDonald is managing director of Hooke & MacDonald