AFTER years in the doldrums, the Dublin Georgian office market has begun to bounce back. Estate agents say demand is rising from mainly small professional firms wanting to relocate to one of the Georgian squares.

Agents say prices have risen by 10-15 per cent in the past year and could go even further because of the strong demand from owner-occupiers. The market is being driven mainly by low interest rates as small companies are opting to buy property rather than rent it.

The directors of some businesses are planning to use the Georgian investments as a pension fund, according to one property expert.

Funding is available at very keen rates and in some cases the interest repayment would not be as high as the rental repayments," says John Finnegan of Finnegan Menton.

His company handled the sale of a large Georgian building on Fitzwilliam Square, Dublin 2, which US Insurance company Cigna occupies. Cigna, which was paying a rent of £91,000 per annum for the 7,000-square-feet building, paid a record £1.25 million for the building. It has now put it back on the market and is seeking offers of around £900,000.

Scarcity of supply is also a factor pushing prices upwards. ("There is a very limited supply of Georgian buildings," says Peter Stapleton, a director of Lisney, whose company sold about six Georgian houses last year.

Mr Stapleton says the Georgian market is the most volatile of all commercial sectors in terms of sales. There is good demand for buildings priced up to £400,000 but he says, once prices exceed that figure, the demand thins out.

"There is a certain amount of pent-up demand," says Duncan Lister of Hamilton Osborne King. "People who already own Georian buildings are slow to sell them."

HOK and Elliott and FitzGerald recently sold a Georgian office building, with over 3,000 square feet, on Lower Baggot Street for a figure close to £350,000. It had no garden, some car-parking and needed some refurbishment, according to Mr Lister. He says a year ago, the same property would have made around £275,000-£300,000.

He says during the last property boom in 1989-1990, a lot of own-door office buildings were built. Many people who owned Georgian buildings - especially a row of houses - sold them and bought purpose-built modern offices.

"No own-door office buildings are being built, so a lot of Georgian property occupiers are sitting tight," he says.

Agents say those traditionally associated with occupying Georgian buildings - accountants, doctors, solicitors, consultants - are the main buyers. Their construction and size does not really suit "big business" they say.

The most desirable area is Fitzwilliam Square, followed by Merrion Square, say agents. The houses have prestigious addresses, are located close to the city centre and many still have car-parking at the rear. Recently, a house in Fitzwilliam Square made headlines when it was bought by Dr Tony O'Reilly, for a figure believed to be close to £900,000. It had been very well restored and is one of few houses which are being bought as private residences.

Sean Davin of Davin & Co which handled the sale, says Georgian property values epitomise the cyclical nature of property. The sale to Dr O'Reilly he says, represents a high point of the current cycle to date. "The last cyclical high point was in 1989-1990 when several houses were sold for £900,000-plus. One of these included 35 Fitzwilliam Square which was sold for £900,000.

Mr Davin says it is essential a special fire policy, specific to Georgian houses, be drawn up. "At present, hardly any Georgian house used for business or residential complies with the full fire requirements set out by statute," he says.

He argues it is unreasonable that, for example, one department of Dublin Corporation requires the preservation of Georgian buildings, while fire safety requirements are in conflict with that objective.

"If Government incentives are introduced they should have regard to an imaginative fire policy which allows for the conversion of for example, original 18th and 19th century doors, ceilings and other features which would otherwise be fire-rated," he says.

Agents say very few houses are being bought for conversion to apartments, because of the high costs involved, again to comply with fire regulations and the fact that they are not always suitable for conversion. The higher the prices go for Georgian buildings, the less likely it is that they will be converted into residential use.

Peter Stapleton says some form of tax break, or designated status, would be needed for any significant move back towards converting them for residential use.

"Tax breaks are a massive driving force for property redevelopment," he says. "If a property has tax designation, it makes all the difference," he says. "The traditional areas are being ignored while assistance is being given to new buildings," he says.

Mr Stapleton says "the days are gone" when investors would buy Georgian buildings for rental income purposes. "Investors are terrified of the fire regulations which are laid down," he says, "and quite often, refurbishment costs are way out of line with what you would get by renting them afterwards."

Agents say the current economic boom is helping the Georgian market's rental sector. Not too long ago, there were dozens of office suites to let around Fitzwilliam Square, Merrion Square, and Leeson Street.

According to John Finnegan, office suites which were making are now fetching £11-£12 per square foot, while some suites are achieving more than £12.

Mr Finnegan says changes in the Landlord and Tenant Acts, whereby leases can be extended from two years and nine months to five years without giving a tenant rights, has also helped the market considerably.