'We can rent out our apartments 10 times quicker than sell them'
The firm behind a massive Dublin housing development expects that it can rent out properties 10 times faster than they could be sold on the market.
Global real estate firm Hines Ireland believes it can rent out 80 apartments a month to tenants, but could sell only eight properties a month in the current climate.
The firm - which partners in developments with long-term investment organisations like pension and sovereign wealth funds - controls 60pc of the massive Cherrywood development site in south Dublin.
Last November, Hines Ireland submitted the first planning application for a road network to pave the way for a new urban centre there.
There are major plans for a new town along with up to 3,800 apartments and houses at the site.
The proposed building-to-rent development would be at the new town centre, and would comprise of around 1,500 units if it gets the planning go-ahead from Dún Laoghaire Rathdown County Council.
"We're very much taking the view that if we want to build in volume and scale quickly we have to go down the build-to-rent market," Mr Moran told the Housing Agency's annual conference.
"If we were to sell the units out here we'd be looking at, after an initial flurry - of about eight a month - as what the absorption would be in terms of selling them given all the constraints that people have around borrowing, etc.
"If we were to rent, we'd have 80 a month," he added. "This thing will be successful so we've appealed to the planning authority to work with us on a build-to-rent model just in the town centre."
He outlined how the efficiency of the apartment designs is crucial to making the business model work.
"In the absence of doing that, we are not going to get our cost-base efficiency down to a level that allow us to underwrite this purely off rents, not on sales and that's the critical thing."
He said that the designs comply with new apartment guidelines - allowing for smaller units - which were brought in by former Environment Minister Alan Kelly last year.
Mr Moran showed an example of a 74.5sqm two-bedroom apartment that has no corridors. Instead, the external door opens into the kitchen and living area.
"So the new codes that have come in allow us to look at these models. This is now possible," he said.
He added that Hines has experience building similar units in the United States. The design relies on the installation of a sprinkler system and Mr Moran said that the firm had been working with Dublin Fire Brigade and other agencies in Britain.
He said the company's research showed their design was "10 times safer than a traditional apartment unit built with a corridor" in relation to fire safety.
"So we're hoping to move that process forward with the local council and get this approved."
Mr Moran told the Irish Independent that the Central Bank's mortgage rules have made Ireland a more "normalised market" and that the country is no longer a "credit-crazy bubble".
"People are not in a rush to buy, they make the careful decision," he added, saying this is the basis of the eight sales a month estimate.
Of the building-to-rent strategy, Mr Moran said: "You're bringing a new product to market so it's a shiny new car if you want. It has that new leather smell in it.
"People will often leave another apartment that's run-down and move to your (new) apartment."
The Housing Agency's conference was entitled 'Achieving Affordability' and heard presentations from the Money Advice and Budgeting Service, while property pundit Karl Deeter spoke about mortgage arrears.
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