Prime Dublin residential specialist agent, Owen Reilly yesterday reported on the latest trends in the prime Dublin residential market during the third quarter of 2020.
In the rental market, the specialist noted that void periods (vacancy after expiry) have trebled and average apartment rents have now fallen 12% since the onset of the pandemic in March. However, rents on houses have increased due to a lack of supply while one bed apartments are proving difficult to let as “couples shun them given the lack of space to work from home”.
The agent goes on to state “most new planning applications in Dublin comprise of studios and 1 bed units, something for developers to consider perhaps”.
Overall, the report views the Dublin residential market as considerably more stable in the third quarter than in the second quarter (rents fell by 4.7% in the third quarter versus 7% in the second quarter) but notes the market “is very favourable for tenants in terms of choice”.
Goodbody Stockbrokers say this chimes with similar messaging they are hearing where prime apartment letting stock, especially in the Dublin Docklands, is being offered on increasingly favourable terms for tenants.
On the residential sales market, the Owen Reilly report notes that agreed sales prices were 1.2% below asking prices in the second quarter while the fall-through rate (of sale agreed properties) has returned to more normal levels at 11% of transactions versus 60% during the height of the COVID lockdown in the second quarter.
Interestingly, and in-line with international norms, the update provides per square foot pricing for recent transactions which shows deal pricing down 11% year-on-year reflecting an average sales price of €576 per sq.ft.
Goodbody say this figure further highlights the viability gap in building apartments in Dublin given an SCSI report on building costs (albeit in 2017 when construction costs were lower) stated that average construction costs for an Dublin urban apartment were in the region of €485 to €597 per sq.ft.
According to Goodbody Stockbrokers, "The Owen Reilly third quarter 2020 report provides a useful gauge of performance at the topend of Dublin’s residential lettings market, an area which has been the primary focus for new entrant institutional investors. However, IRES’ exposure to this segment is minimal with only The Market Residences in the existing portfolio, and its new development on Merrion Road (former Tara Towers site) at the prime end of the Dublin market."