Lack of apartments near 'Silicon Docks' putting homes out of families' reach
HERE is a question for you. How much does it cost to rent a one bed apartment in Dublin's docklands?
If you said €1,000 a month, you're way off. A quick look at prices on Daft.ie shows there are a number of one bed apartments available, but you need to be prepared to pay upwards of €2,000 per month for the privilege, with some agents demanding as much as €2,500 per month.
You don't have to be a property expert to know that prices like these are not healthy for the long term. Compare that to London - historically one of the most expensive cities in the world - where a one-bed apartment in Victoria in central London is available for letting for the euro equivalent of €2,100 per month.
The growth in rents in Dublin has been a product of the prosperity that has come around the so called "Silicon Docks" area of the city at Grand Canal Dock. The presence of Google and Facebook, with AirBnB and LinkedIn nearby as well as a host of smaller companies, has helped drive up prices in the area.
The problem now though is getting acute, and it is having a knock-on effect on the wider housing market.
Kevin McGillycuddy, whose investment firm Brehon Capital owns the Marker Hotel in the area, is clear the problem is acute.
"The last meaningful release of apartments in the docklands market was in 2012, and since then we have seen no new residences built in this area.
"Given the growth of companies in the area, the constraints of construction financing and lack of cranes on site today, we realistically will not see any new apartments for another two to three years and this is causing a knock-on effect on rental values both in this market and beyond," he says.
The docklands has become almost a separate economy to the rest of Dublin, but it is now having a serious knock-on effect on the rest of the city.
Many of the workers in the area will not settle in Dublin but are here for a couple of years. They want to live close to their office but due to the high rents, many are sharing houses in the suburbs that could otherwise be used by families and first time buyers.
A Google spokesman says the company does occasionally hear of staff having difficulty finding good accommodation in Dublin, and helps them find places to live "around Dublin, and not just in the immediate vicinity" with a "broader price range".
The upshot has been a sharp increase in the cost of renting a family home close to town. In Dublin 4 for example, renting a three bed house cost around €2,200 per month at the start of 2013. By the end of 2014 it cost more than €2,500 per month.
That increase has been driven by a number of factors, but the number of new staff taking houses instead of apartments has been a big factor. The IDA is aware that if a company can't house staff in Dublin, jobs could go elsewhere.
'Measures included in the Government's Construction 2020 plan, will boost supply and address rising rental values. But clearly more will need to be done in the coming period to make sure the issue is addressed," says a spokesman.
"Ireland retains strong competitiveness advantages over many competing locations, but these must be protected," he adds.
The problem was thrown into sharp relief this week when a technology firm leased the first 27 apartments to be put on the market at Wyckham Point in Dundrum, a development being completed by Hibernia Reit.
So what can be done? For Hibernia chief executive Kevin Nowlan the answer is clear: more supply, and with fewer restrictions.
"Dual aspect requirements make investment in residential rental economically unattractive, while in the city centre only about a third of apartment users rent a car space with their unit yet our planners require one space per unit," he has claimed.
Only with more supply, can rents reduce, and the market return to anything like normal.