Building development prices under scrutiny

Since the size of projects and areas used for housing construction can vary considerably, it is not possible to present precise building development prices in the different municipalities.

This is stated, among other things, in a reply note from Iddimanngiiu Jensen Bianco, Inuit Ataqatigiit, who is Naalakkersuisoq for Housing, Infrastructure, Outlying Districts and Emergency Situations, to Inatsisartut member Mette Arqe-Hammeken, Naleraq, who, via a paragraph 37 question, wants to obtain clarity about the prices for building development for housing construction in the different cities.

The task of the municipalities

It is the task of the municipality to create optimal conditions for housing construction, and contributions to building development are determined by the municipal council. Therefore, the municipal councils also manage the local authority responsible for, among other things, land allocations, planning and construction of new public sewer lines, and operation and maintenance of the main sewer lines in built-up areas within the municipal boundaries.

Some municipalities, including Kommuneqarfik Sermersooq, have a sector plan for development. On this basis, the municipal council has therefore designated development as one of the political target areas to be promoted in order to create the best framework for the development of Nuuk, where housing construction is significantly larger compared to other coastal cities.

Depends on the size of the project

Development is a capital-intensive activity in Greenland. It includes earthworks, the establishment of roads, supply lines and other infrastructural measures. And due to the unique climatic conditions and geographical challenges, the process and development prices can vary depending on the specific area and the size of the project. The Naleraq politician also wants to know what the average price is for building development for residential construction specifically in Nuuk, Sisimiut, Ilulissat, Qaqortoq and Aasiaat.

- I think we need to be careful that building development prices do not run wild, especially in the smaller towns where the economy is struggling. But it is also difficult to know the price difference for building development in the different towns. Therefore, I think that building development prices in the different places should be more easily accessible, says Mette Arqe-Hammeken.

Naalakkersuisoq for Housing states that significant differences in the degree of building development offered in the individual sub-areas are often part of the explanation for the price differences, and that it is therefore not possible to provide average prices in specific areas.

- Factors that affect prices include the extent and standard of development for road construction, establishment of water supply, sewage system, electricity supply and terrain regulations, as well as land use.

- The municipality can choose either to set a distribution key for calculating the contribution to the development, or a standard contribution. Both parts must, however, be set and announced in a municipal plan or in a municipal statute, says Iddimanngiiu Jensen Bianco.

She also states that comparisons across areas must be made with caution, as there may, for example, areas where the development does not include the possibility of connecting to public water supply and sewerage.

Variable prices

According to Iddimanngiiu Jensen Bianco, recent experience prices show that the development share can vary considerably from around 300,000 kroner per home in a complex development to over 1 million kroner per home in a dispersed development.

- There may be differences in standards, including the width of carriageways, which are for example district roads, neighbourhood roads or local roads, and whether footpaths or cycle paths are constructed along with the road layout.

- In some places, the construction development is supplemented with footbridges and stairs. The amount of rock that must be blasted away by the necessary regulation of the terrain also has an impact on the price of the construction development.

- Furthermore, competition among the companies carrying out the development can vary between settlements over time and thus affect prices, says Iddimanngiiu Jensen Bianco.

Measured per housing unit, the contribution is typically higher for single-family house construction than for multi-family housing construction, as the utilisation of the construction development is less efficient for single-family and terraced house construction than for the denser development of multi-family housing.

Municipalities can also adjust the prices for building development contributions in order to support local development, informs Naalakkersuisoq for Housing, Infrastructure, Outlying Districts and Emergency Situations.

Prices are rising

Building development in Greenland is generally associated with very high costs compared to Denmark, primarily due to logistics, terrain conditions and materials that must be transported to the country.

According to information from Statistics Greenland, building prices have increased by 6.4 percent from July 2023 to July 2024, which is also a significant reason why the prices of building development have increased significantly in recent years.