Executive rentals no longer big business as multinationals cut back on relocation deals

The corporate family let is no longer big business for the rental sector. The impact of the US economic downturn here has meant that some multinationals cannot afford to lure workers from abroad with lavish relocation packages.

Fewer are bringing high-ranking executives over with their families to oversee operations and those that do bring staff here are becoming "increasingly selective", according to one industry source, when deciding which employees they will provide accommodation for.

There is a glut of properties at the £3,000 €3,810) and upwards per month category of the market. Previously, these houses - which are generally large enough to comfortably entertain guests - were being taken by company CEOs, MDs, film studio executives and diplomats and their respective families.

Embassy budgets are also being tightened, whereas before, according to one agent, "when it came to the cost of staff accommodation, it was a case of carte blanche."

"Bigger houses with high rents are sitting there," says Sara Wallace of Colliers Jackson-Stops relocation agency, "Irish families are generally not going to rent a big house at the upper end of the market unless it is temporary accommodation while looking for a suitable house to buy or they are waiting for a new house to be built. They'd normally go for a more modest and reasonably priced three-bed in the suburbs."

As demand takes a nose dive, the supply of these larger houses continues to grow as more owners are failing to sell them at auction or by private treaty and are opting instead to let.

The result is that rents in this sector of the market have dipped.

"Landlords will usually drop the rent by a few hundred pounds rather than just have it sitting there for months," says Ms Wallace.

Joan Fogarty of Lisney says that while there are now more properties on their books for around £2,500 €3,157) a month, the market for those over £4,000 €5,080) per month has "almost dried up".

"To have any chance, properties let at this level should be in very good condition so we sometimes have to tell owners that they will have to get a new bathroom or kitchen and bring the house up to standard."

At the lower to middle range of the market, where properties are priced at £800 to £1,500 €1,016) per month, she says "there is still not enough supply".

"But we don't foresee rents going up. While there is still great demand at this level, the supply of properties seems to have improved."

Staff cutbacks and the decision of some employees to return to their native countries at the end of their contract has also freed supply.

With the pressure off, the situation forces landlords to be more realistic in their demands. As demand slackens, prospective tenants are becoming more choosy, sometimes viewing three or four properties before deciding on one, according to a lettings agent from HOK Residential.

"Lots of agents are finding the same thing, they are showing properties and people are not jumping and saying 'I'll take it straight away.' Landlords are having to be more flexible, I heard of one lady who couldn't get a corporate let and rented her house to five students. Her attitude was, she was coming back in a year's time and would be redecorating anyway."

Corporate tenants are now more likely to opt for short-term leases, says James McMahon of Corry McMahon.

"There is still a big question mark over the future of some of these corporations and many are waiting to see what is going to happen. Corporate clients are less likely to want to take a two-year lease now than a year or two ago when the Celtic tiger was booming. Generally they go for leases of up to six months." Among the areas of Dublin worst affected by this market shift are the southside areas of Dalkey, Killiney and Sandycove, once regarded as highly desirable places to live by company executives.

According to one agent, who declined to be named, these coastal areas have lost out to more central locations like Ballsbridge.

"While Ballsbridge has been affected to some extent, its central location and the fact that it is the embassy hub means that there will probably always be a demand. Whereas with Dalkey, you are paying huge rents for a place with great views and a picturesque village but you also have a 45-minute commute to the city centre."