Only way is up for rents in €160m sell-off of apartments
Higher rents but better-quality tenancies are expected as the mass buy-up of blocks of apartments in Dublin continues.
The increased trend in companies getting into the apartment lettings market was demonstrated in news that a giant tranche of almost 800 apartments is up for sale for €160m on the instructions of NAMA.
The announcement yesterday has been hailed by the selling agents as the "largest and most interesting portfolio of modern purpose-built residential units ... to be offered on the Irish market".
It's expected to attract the interest of international equity funds, which have been consistently buying up entire blocks of Irish apartments and chunks of residential rental property for the past two years amid world-beating yields.
The vast package of 761 apartments, along with 33,864 sq ft of commercial accommodation, has been dubbed the 'Orange Collection'.
The properties are located at four different sites – Dublin's Beacon South Quarter in Dublin 18, at Charlestown in Dublin 11, Lansdowne Gate in Dublin 12 and Baker's Yard in Dublin 1.
The schemes had been developed by Bovale, Cosgrave and Landmark Developments, among others.
As property prices rise steadily in the capital, so-called vulture funds have been swooping to acquire modern blocks – usually schemes stricken by the property crash, but now in high demand because of the shortage of family housing.
While rents are expected to rise as the trend continues, tenants may enjoy a better-regulated living space.
In the case of NAMA's 'Orange Collection', it has been indicated that the new owner can almost immediately increase the rents of the tenants by 8pc.
Increases of between 5pc and 20pc have been common wherever equity funds have acquired buildings.
Property expert Karl Deeter of Irish Mortgage Brokers added: "Dublin's apartment rental market is changing in line with what has been typical in the USA and in Europe, with funds owning entire blocks.
"Usually this means rents are maximised across the board, but it also means that tenants find themselves in a better organised and better regulated environment.
"If this sale is successful, I'm guessing the next step is for to equity companies to commission developers to build entire blocks on their behalf."
However, other market sources expressed concern that the lack of child-friendly houses is forcing families to live in apartments and this scenario is in turn artificially increasing demand for more blocks.
The continued purchase of Dublin's once-huge overhang of apartments by equity firms also means that these properties are not being offered for sale to private buyers.
Mr Deeter added: "There is perhaps a question to be asked: whether these firms are coming here from around the world to buy apartment blocks in Ireland because perhaps NAMA is selling them too cheaply."