Strong investment sales in several new apartment developments recently have contributed to an over-supply of property to rent at the upper end of the market - at a time when corporate tenants are becoming thin on the ground. A high number of rental units in new schemes such as Seamount and Merrion Woods, off the Stillorgan dual carriageway, have led to a glut in the £850 to £1,100 end of the apartment market and agents are urging landlords to hold on to the tenants they have - or lower their expectations. "There's quite a lot of property in the market towards the upper end of £850-plus," says Amanda Davis, of Christies. "The trend is being slightly reversed from a situation where rents were rising all the time." Prospective tenants may not exactly be having a field-day but they certainly have a lot more choice. "There's still good demand but there's a lot of property available. One-bedroom units are harder to get and there is pressure at the bottom end of the market but not at the upper end."
Amanda Davis warns clients against hanging out for the elusive corporate tenant coming into the country with a fat rental allowance. "There aren't so many of them around at present. Lots of Irish people have plenty of money too, and landlords shouldn't be so sure they want corporate tenants."
There are, of course, corporate tenants and corporate tenants. Not all that many companies are willing to pay the rent and take the responsibility for the letting.
Many so-called corporate tenants are going it alone but just happen to have a good salary and come from abroad.
Christies has what it calls "executive apartments" at Herbert Park Lane, overlooking Herbert Park, from £1,600 a month. It also has others in the same block costing from £800. Two-beds in the Sweepstakes are renting from £850, while in Merrion Woods rents average £900.
In the city centre, you can go truly up-market with a duplex two-bed in Dunloe Hall, in Merrion Street. It rents at £1,800.
These rents are clearly aimed at a very specific client, - because at that rent level, not that many tenants would have the equivalent of one month's rent for the deposit, on top of legal fees for the lease.
"We don't have that many people coming in who will pay rent of £2,000 a month," says David Lewis, of Sherry FitzGerald's residential letting division. He confirms the plentiful supply of property at the top end of the market, with new schemes in Booterstown and Galloping Green coming on stream. Rents for these will vary from £850 to £1,100.
He has been advising clients with existing leases to hang on to tenants. "There are some historical rents in some blocks which have run for three or four years and the market rate might be £800 but the client is getting £600. Rather than have a vacancy, we suggest the client renegotiate and, say, take £700."
Landlords are attempting to cover themselves for costs. David Lewis estimates yields at 5 to 6 per cent, which is about 2.5 to 3 per cent after tax. "Investors are buying these top-range apartments for the capital appreciation rather than the yields, which aren't great. They have insurance to pay along with letting and legal fees, as well as the management fees."
The Bacon report has had some impact at this end of the market, says Kathrina Cahill, of Home Locators. She accepts landlords have to cover their costs but she would urge them not to become a "victim of their own greed".
She says landlords will quite happily seek around £1,000 or more for a two-bedroom apartment but companies are no longer so keen to bite the bullet. "We find that, in general, companies are putting a ceiling on rents. The corporate tenants are still coming in but they have plenty of properties to choose from."
She says young professionals will pay a good rent as well and might be more likely to stay for longer.
One of the problems facing agents is the copycat effect. "A landlord hears that someone else in a particular apartment block is getting a higher rent and wants to up theirs. I'm getting a bit worried about some of the rents. There's only so much people will be able to afford," she says.
Two-bedroom apartments in desirable locations such as Merrion Woods and Pembroke Square, opposite Kitty O'Shea's pub, Grand Canal Street, fetch about £800 to £1,200. Home Locators has many apartments almost tipping the £1,000 mark, with two-beds in Eastmoreland Lane, Raglan Court and Pembroke Road starting at £950.
On the other hand, one-bedroom apartments, such as those in the Beaumont Woods development, are flying off the books. There it was mostly young couples saving for a first home who checked into the £500 a month apartments near Beaumont Hospital. Two-beds from £700 and three-bed duplexes at £850 are still available through Hamilton Osborne King (HOK).
Amanda Brogan, of HOK, is also worried about the level of some of the rents being sought. "You would want to be on a very good salary to pay some of the rents," she says. "And once a certain level has been achieved in a development, the rents creep up."
She says the corporate tenant is still coming in but "it's a bit quieter than in previous years". The choice for the tenant is also large on HOK's books, with a two-bed in a Georgian house at Fitzwilliam Square renting for £1,150 a month, and a two-bed in Pembroke Square for £900. Middle range property along the quays rents for around £600 and in Dublin 7/8 £500 to £650 is the going rate for one-beds.
Something else that makes a difference is the availability of a car-parking space. A two-bed in College Gate, Townsend Street, in the city centre, is on the books of HOK to rent at £800 a month without a car space but a similar apartment at Trinity Plaza, just opposite, is renting at £900 a month with a parking space.
