No sign of relief for priced out student renters
In need of a Dublin apartment, a German student has taken to interrupting random strangers at lunch to ask if they know a place to rent.
Felix, 24 and from Frankfurt, is due to start studying business in Dublin this month. Since being offered a spot for the masters course in June, he's been searching for a place to stay. Last week, he strolled up to a sharp-suited man eating steak in Beeftro, an upscale restaurant just off Dublin's Grafton Street, to ask him if he had any ideas. He didn't.
"I'm a little bit desperate," said Felix, who asked that his last name not be used out of concern it would hurt his chances with a potential landlord. He's willing to pay more than €1,000 a month for a place. "It's a nightmare."
Felix's story is a microcosm of an accommodation crisis that has swept across Ireland. With few new homes being built after the real estate crash in 2008, rents have surged 25pc in the last three years and a one-bedroom in the city center can rent for about 1,360 euros a month. While that hurts tenants, it's a success for companies like Deutsche Bank, which runs Europe's largest investment bank, Kennedy Wilson. and Irish real estate investment trusts (REITs) which bought huge tranches of rental property after the crash.
"The biggest winners are those that got in early, the Kennedy Wilsons, the REITS," said Ronan Lyons, an economist at Trinity College. "The outlook for their shareholders is excellent because rents are likely to keep on rising, though maybe not quite at the same pace, due to a lack of new supply."
About 4,600 rental properties were on the market at the start of August, a decline of more than 80pc from July 2009. Deutsche Bank bought 680 Irish rental homes from last year. Kennedy Wilson has about 1,200 properties in Dublin, with another 320 due to become available over the next two years. Since Kennedy Wilson started buying rental real estate in Dublin in June 2012, home prices have risen about 24pc. And even since Deutsche Bank's deal last year, they're up 15pc.
"The key drivers of demand are all putting upward pressure on rents," said Philip O'Sullivan, an analyst at Investec in Dublin. "We expect to see rents continue to march higher."
Shares in Hibernia REIT, which owns apartments in south Dublin, have risen 10pc over the last six months, while the Bloomberg Europe Real Estate Index has dropped 5.8pc. Irish Residential Properties REIT is up 2.6pc over the same period.
For people like Felix, however, rising rents mean pain. After his conversation in Beeftro led nowhere, he went to see an apartment in Clontarf, close to the coast in the north of the city.
He and his mother arrived early, and found an apartment with a bathroom he describes as "dirty," renting for €925 a month. He passed. Though still hopeful of getting accommodation provided by the university, he's going to have to crash at a friend's place if he doesn't have a place by the start of classes.
"I couldn't imagine it was going to be so difficult," he said.