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The right moves: On unfurnished apartments


The moves come as the property market becomes flooded with rental properties

The moves come as the property market becomes flooded with rental properties

The moves come as the property market becomes flooded with rental properties

Incoming companies are complaining that finding quality apartments and houses in Dublin for their executives is proving to be a real problem. The numbers of overseas executives locating here is starting a reversal of the traditional position in Ireland whereby apartments are usually offered furnished. Now, however, there is a new demand from tenants, from North America in particular, who wish to bring their own furniture. Adding to this is the growing number of Irish nationals returning from abroad, who also have their own furniture.

I was alerted to this trend by Owen Reilly property consultants who have a strong position in the commercial and residential markets in docklands. I had retained Owen Reilly to let my own docklands investment and I relied on his advice, firstly to fit a timber floor and secondly to offer the apartment unfurnished. He warned that it would take perhaps twice as long to rent unfurnished but that "unfurnished rents" have rapidly closed up on "furnished rents." A big attraction for me is the convenience of not having to change mattresses and clean and replace damaged furniture every time a tenant vacates.

Taking tax allowances for furniture into account, it seems to me that the lower rent broadly reflects the cost of furnishing an apartment. This trend is strongest at the top end of the market but the biggest payoff is Owen Reilly's advice that tenants who bring their own furniture tend to stay in apartments much longer. All of this, it seems to me, with tenants leasing into their 30's and 40's, is a sign of a rapidly maturing rental market.

A good news story came my way from Kevin Hollingsworth who is a former chairman of the building surveying committee at the Society of Chartered Surveyors Ireland. Kevin practises as a sole trader and saw an opportunity to grow his business in the area of repairing defective buildings, typically apartment blocks. Kevin told me that the idea of ramping up his operation was daunting but having made enquiries through the Job Bridge and Jobs Plus schemes, he was amazed at the high quality of surveyors who were available through those programmes.

He established a new company, Omega Building Surveying, less than a year ago and has already employed three building surveyors who were on the live register. Two of the surveyors have finished their internship and are now permanent employees and a third will complete that process shortly. The team has assisted in providing 125 unfinished apartments to the private letting and social housing markets and a further 600 units for sale on the open market.

Jobs Plus grants in the range of €7,500 to €10,000 per employee are available over two years. Mr Hollingsworth praised the level of assistance available from Intreo, which is the Department of Social Protection's single point of contact for employment and income support schemes. Whilst indications are that there has been a rebound in CAO applications for the various property courses this year, there will be a dire shortage of talent for at least five years. Employers struggling for manpower but nervous about expanding operations may well look at the Job Bridge option.

Crowdfunding of real estate took off in the US from 2012 and it's estimated that crowdfunding there is running at the rate of $5bn per annum, to include part ownerships in skyscrapers at the World Trade Centre. Crowd funding is established in the UK and now Irish investors are being offered opportunities to participate here.

Crowdfunding sees large numbers of investors invest amounts from as low as €1,000 over the internet and the funds are used to buy property. Investors share in their proportion of rental income and any capital uplift and the promoters earn a fee for each acquisition and an ongoing management fee. It is based on a similar principle to REITS in that it allows small investors access to large scale deals.

Daire McCaughley of LikeProperty.com told me that over 500 investors have already joined his site and that their target is to crowdfund €100m of property, comprising approximately 10,000 investors over 10 deals. Mr McCaughley says that crowdfunding offers depositors the opportunity to get much higher returns from property.

Of course, investors should always take professional advice before making decisions.

Indo Business