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Rick Larkin Season 2 Episode 8

Housing shouldn't be a one-size-fits-all proposition. Yet in a decision that stands alone in Europe, Ireland banned an entire category of housing with a ministerial pen stroke. Why?

Peter Horgan, co-founder of Lucas Capital and Grayling Properties, takes us inside the world of co-living - professionally managed, community-focused accommodations that serve as landing pads for young professionals relocating to Dublin. With 70% of residents being newcomers to the city, these developments fulfil a critical need in the housing ecosystem, yet they were banned in an act of self-sabotage that is an all too common move by policy makers.

Show notes:

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Speaker 1:

so I have a couple of admissions to make. First of all, go on, I've, I've never, I've never been in a co-living thing. I'm like a big fan of co-living, yeah, but I've never been in one.

Speaker 2:

Okay, so you like the concept, but you haven't yeah.

Speaker 1:

So I don't think it matters that I've never been in one. No, I don't think it was either in my 40s. I'm not the target demographic for co-living, but I've been arguing with policy makers and people like co-living is a great thing, co-living is a great thing, it should. And. But like yeah, I've never been in one. Uh, but yeah, sorry, so I forgot to introduce you. So yeah, peter, who are you?

Speaker 2:

so I am the co-founder of lugas capital and grayling properties, I suppose I started my work journey after coming out of finance and ucc and Grayling Properties.

Speaker 2:

I suppose I started my work journey after coming out of finance in UCC and doing the year in Australia and not really knowing what I wanted to do, but luckily I got working in stockbroking with Good Bodies originally, and Davey, and that's a great job, I think, for a young person that's interested in, you know, the world, economics, investment, because I was an analyst covering hotels and property, then equity sales and effectively from you know, the age of 23,. I got to travel North America, london, europe, meeting some of the smartest people investing and learned a lot from just even listening to them. And then you know, you gain your own confidence in these things and your own ideas and you start trying to pitch ideas to people and you know that's a, that's an important part of you know, building your confidence and your ideas etc. And that very much then led on to where I've ended up co-founding Lucas Capital 2012-2013 in Ireland.

Speaker 2:

Understanding economics, understanding the stock market investment, gave myself, my co, tim Call, the confidence to go out and invest in the property market. Now we knew plenty about investment not plenty, but we felt comfortable in investment. Back then. We saw it as an investment. As you would know more than any, there's a lot more to property than that, but it's better to be lucky than good and timing is everything, so that was a great entry point we really built lucas capital out of that, uh, which is a business very much originally focused on residential and residential sort of affordable city center micro apartments.

Speaker 2:

We saw great opportunity in retrofitting older p63 buildings. We've done over a thousand of them and you know, at that, like there was only what 1,500 to 1,000 apartments being built in Dublin yeah, In Ireland actually. So we saw, you know so, the influx of young people into Dublin driven by the multinational sector. I thought, well, these people have nowhere to live. There's all these, a lot of them vacant at the time pre-63 buildings in rag order. Why cannot we, you know, deep retrofit them and provide an affordable solution to all these young people coming to Dublin or being drawn to Dublin by the job opportunities?

Speaker 1:

So that was really kind, of you know, our starting point.

Speaker 2:

That was a very successful strategy. You know, we exited two portfolios of that. Paying Capital were great to back us at the time on that and building out those portfolios as soon as we got deeper into that. Residential property is very, you know, operational and if your operations as you know as well, if your operation side is not right, you can seriously devalue an asset.

Speaker 2:

You can really drive value by operating the property, so any outsource providers. We just felt we could could do a better job. So we set up Grayling Properties, which is our operating platform, which is, you know, everything from lease up to management, to maintenance, to in our co-living developments. We hire everyone from the concierge through to the cleaners directly and that's to drive operation performance but also service levels, to make, uh, you know, the people we're talking about earlier happy living in a place like like ratmine's house, like the miniature outsource, I think you just lose a bit of control in terms of customer service.

Speaker 1:

well, there's a different, because we, as you know, we do exactly this, the same thing, on our resi side and it's not for, it's not hassle, free, right To. To run an operational business like that, where you're hiring the people and dealing with people, is not easy, but at least everyone's pulling in the same direction. I, I, just I, I find that when you, when you see the outsourcing, the way that's done, like it becomes a commoditized business really quickly. Yes, and it's just about, like, fulfilling the contract. No one really cares.

Speaker 2:

Yeah, and it's literally that's my job description, or even for the person providing the service. Yeah, and actually a good example is that of that was. So I should mention Ger, actually, who runs Rat Minds House, who comes from a hospitality background, and he's been fantastic. When he came in, he was we're not outsourcing anything. He was like if I'm running this, I'm hiring everyone directly, but it also allows for great flexibility, but you won't get off an outsourcing.

Speaker 2:

No so yeah we found that, you know, it's been a better way to run our assets and I think we've done a good job. When assets have traded, we've stayed with them. We haven't lost an asset to a trade yet, which I think shows that or uh, we do provide those levels of service and we want third party business as well. So, yeah, that's been sort of our journey to date. That knowledge of young professional market which we gained through the pre-63s made the move into co-living sort of a natural move for us.

Speaker 1:

Because the pre-63s and for people who are listening that they hear pre-63, maybe they're younger are listening that they hear pre-63, maybe they're younger they don't know what that is in 1963 the planning act was, uh, was brought in, or, as tom phillips would point out to me, the planning and development act, um, because it's not just about planning and before that you didn't need planning permission to do anything in ireland.

Speaker 1:

That's correct, which is hard to believe, but it's true. So a lot of big, primarily georgian, georgian houses were subdivided in the period before 1963 into what were bedsits, very small apartments that had shared kitchens and sometimes shared bathrooms. My old man lived in a few of them when he was up here as a bricklayer, when he was starting out, and for the most part wouldn't have been a whole lot of maintenance, wouldn't have been a whole lot of looking after them, but it was cheap accommodation and it served, it absolutely served a purpose, a purpose at the time. Everyone refers to them as pre-63 because obviously you wouldn't be allowed to do that now, but because they were done before. They were left that way and they are permissible still, despite, I think was done before they were left that way and they are permissible?

Speaker 2:

uh, still, despite, I think was it john gormley someone tried to ban them. Well, they did effectively remove bedsits which were an early substandard form of so they're the ones that didn't have like kitchens, or exactly yeah, they were literally a bedroom. They were literally a bedroom with a shared. You have to on under the standards and rental accommodation. You have to have everything contained within the unit.

Speaker 2:

Okay, so your pre-63s now are essentially like studio apartments, Studio with one beds two beds, yeah, yeah, but they'd all be classified on the continent as micro apartments Because of their floor area. Because of floor area, so, studio, 21 square meters on average, one bed 29, and two beds for the 40 square meters.

Speaker 1:

And when? Because you've exited that business, now right. Well, we've exited the development side of Right, but the management side of it. You still Exactly, you still do.

Speaker 2:

And we manage third party as well.

Speaker 1:

Okay, so that and I know you'll see where I'm going with this Occupancy levels in that how are they Very strong, yeah, like as you'd expect, across most rental accommodation in Dublin. But there's massive demand for that kind of, even though it's small.

Speaker 2:

Yes, yes, like, and it plays a similar role, particularly the studios, maybe not the one beds and two beds, but the studios play a similar enough role to our portfolio does anyway to co-living. It's generally in Dublin 6, so it's well located. Yeah, okay, our portfolio I'm sorry, we manage stuff in north side of Dublin just very well, so again, it's that landing pad for a lot of people. Yeah, it's professionally managed by us. You know, the moving process is simple, all that and so, and so it does, and then people land in it's near their work and then they go from there.

Speaker 1:

Yeah, like it fills a, it fills a niche, fills a niche.

Speaker 2:

Exactly so you'd have high churn rates in that as well. Yeah, sort of you know, 40% a year, yeah, so it's a high churn business. But it fills a niche at a certain age of life where people just want well-located, as cheap as they can find accommodation.

Speaker 1:

And good nick, obviously yeah. And look, some older people listen to this and go Pre63, it's not that Like, these are nice, you've done a nice job on these. Exactly, yeah, they're good, but like that it kind of irks me right? We were talking earlier about me supporting the co-living thing. Why. Why is it okay to have pre-63 studios and not okay for co-living?

Speaker 2:

yeah, well, first thing, as you highlighted, is grandfathered, because it's that pre-63 designation, so something that had planning you. You can't take away that planning, even if the planning law changes right yeah, but really co-living became a political football right. It became a populist political football.

Speaker 1:

I think there's a lot of disinformation about this. Yes, you tell me what co-living is.

Speaker 2:

Yeah, so like co-living is community-based, high-density city-centre living and very much, as we've discussed, really focused on young professionals who are relocating nationally or internationally. Okay, focused on young professionals who are relocating nationally or internationally okay, that's the idea of the product we have. By the way, and I should just throw this in, we have a retired lady living in that mine's house and she just wanted a community. You know she didn't want all the trappings of a house and possessions and all that and just want to simplify her life, but also wanted to you know, be surrounded by young people, you and have a community around her.

Speaker 2:

There was a couple who were traveling Europe and onto the base that took a studio for six months.

Speaker 1:

The first person that I met, who lived in one, actually works here and she lives in your co-living thing in.

Speaker 1:

Rathmine's house. I did not know that. Yeah, and we hired her. How long is she here? Like six weeks? Yeah, yeah, and we hired her. How long is she here? Like six weeks? Yeah, so she won't mind, she's from America and her and her husband up sticks from America like six weeks ago and just moved to Ireland, sold their house, sold their dog, sold their everything, just moved to Ireland and we're like, well, where are we going to live? And so they went online, they found Rathmine's house and they're like this is absolutely perfect. And they are looking to, they want to buy a house.

Speaker 2:

But they're the exact people to a degree. Maybe people slightly younger, but that person who's relocating and hitting a new city and wants that you know well-managed community environment. They are exactly the target market.

Speaker 2:

So I'm delighted in a number of fronts. Number one, when they went looking, they found us, so that means my marketing are doing a good job. And number two, that they're really enjoying the experience and you don't expect them to stay. Like you know, a year would be no, we have people who have renewed and gone into their second year, but your average would be like for us anyway. It like for us anyway. It's about 11 months, which I think is about right. I think some people are a bit too short, because you are creating a community and it's hard to get people to know each other If people are leaving every week or there for a few days, you know, yeah, if you have a person on a, on a desk, yeah, yeah, at the front you land.

Speaker 2:

There's a concierge, there's a gym, there's a social network you don't have to worry about. You know how do I get electricity, how do I sign up for a TV package, how do I sign up for internet. You know where do I get my plates and cups and whatever goes with moving. But also, like when you move to a new city, you can read all the reviews you want. But how do you know what neighborhood will really suit you? No, you don't. So, like with co-living, in particular I think with Ratmines House, you land into a pretty cool area. It's near, very close to CBD. You know you get all those advantages and you get to kind of suck it and see, do I like this area? The weekends you can move around a bit. We actually do even tours at the weekends. She said that yeah, yeah, yeah.

Speaker 2:

So people get to know the local area, get to know outside of Dublin, up into Dublin, mountains, glendalough, et cetera, so it gives them a real feel for the city and the area and then they can kind of go. You know, when we were down in Wicklow I really liked that. So maybe we'll move there and get the dart to work. You know that suits our lifestyle or whatever vibe we like. So I think that is exactly what it's meant to be and, like 70% of our tenants, it's their first time in Dublin. Yeah, why 70%, 70%, and so they land and it just gives them that really easy relocation. Yeah, and then sorry, I think we're doing a very good job. So a lot want to stay longer than you'd expect them to, and that's great as well. I do think it has a very strong place in the market because of those features which you don't find anywhere else and you can try and kind of create them. But then it leads to inefficiencies such as house sharing and people overstaying in apart hotels or what have you, or in hotels.

Speaker 1:

The product itself, like let's just look at Rathmine's house, because I know you have a couple of them. What are they? Are they all bedrooms with shared kitchens? Do some of them have kitchen? How does how does that so?

Speaker 2:

and this is why Ratmound's house works as well, by the way, yeah, and why we have good retention. Um, it's larger rat mines house in terms of unit size, so the average size is 21 square meters Okay. And then we've eight square meters per unit of communal and dining space and amenity space Okay. So that gets you to 29 square meters.

Speaker 1:

And is that like in a pod? Like are there? Is it like PBSA where it's?

Speaker 2:

Yeah, it's like so rat mines house is a conversion and all office blocks, so that does lead to odds and ends. Yeah, no sure, yeah, yeah, so, um, but typically, um, you have units, uh, say, or double occupancy for a couple, or 23, 24 square meters, single occupancy, 18 square meters. Okay, and there's bits in the middle as well, but that's your kind of your range, giving your average of 21 and then your eight square meters of of communal space. So, yeah, they're very much laid out similarly, like the 23, 24 would have a similar layout, all of them, and the smaller ones would have a similar layout as well, but they all have a kitchenette and they all are en suite, obviously.

Speaker 2:

Okay, so the kitchen has like a little fridge and yeah, so your fridge a two an oven, a yeah, so your fridge a two an oven, a combi oven. So you know that's a microwave and an oven and a two ring hop. So you can, you can cook in your own unit if you don't want to use, and that's that's generally what happens behind the switch at RS. Ger would say the biggest chef is Deliveroo, because they're young people and they're busy yeah.

Speaker 1:

No, we see that with the apartments too. We nearly need to have a designated requirements to.

Speaker 2:

we nearly need to have a designated delivery spot, the original guidelines pushed to more as this more student thing where you basically have a bedroom, really, and then you know, you know it's clustered around the kitchen, that's six of each air. Whatever we surveyed, uh, our tenants, would you take a bigger unit for less communal dining space? And only seven percent said they wouldn't. Given our background in the Georgians, we felt we knew what was the kind of real sweet point in terms of a studio, a small studio, a micro studio, let's call it, and it is. That's your 20 square meters plus.

Speaker 2:

So really we focused on getting as many of them as we possibly could into Ratmine's house. Now, the run of windows and the fact that you're in an existing structure obviously means you end up with some smaller ones, which actually has taught us a bit as well, because the ones that went the fastest were the smallest and the biggest, you know. So the the best value, yeah, and then the nicest one, the nicest, yeah so if I was doing it again, I would look for some mix of 18 and then 23s and you know if you're doing a new build, for example.

Speaker 1:

You know a lot of the sort of nonsense political chat about this has been. Oh, I heard someone describe them as modern day tenements, but that's ridiculous.

Speaker 2:

Like the building standards still exist, so they have to be built to the same standards. They are just a different mode of accommodation and the 29 square meters we provide per unit, or say per resident yeah is this is actually the same as the 29 meters you get as someone sharing a one bed, for example. Yeah, of your personal space, if you like. I I sorry this is from the.

Speaker 1:

That's from the report that the department of housing did for yeah, but I'm just doing the sum in my head here, because I'm looking at our own units and thinking, yeah, they had 20 plus five plus four.

Speaker 2:

I don't know where the five plus four came from.

Speaker 1:

I don't know where most of their figures come from.

Speaker 2:

to be honest, but let's say that they're correct. So maybe our co-living is providing a bit more, but it's just providing it a community-based format, like social isolation is a big issue, loneliness is a big issue. People do relocate more, they move job more than they would have done in the past and they move to new cities and this is a great way for them to build that community, build that sense of belonging, and that's what it does provide. And we run community events, events, numerous events each week. Uh, you know, we have a week, a calendar of anyone's look that we throw up on our on our um, on our instagram, etc. To foster that, you know, and to drive that community engagement and make people feel like they're part of something, but also to give them a Dublin experience. Those tours, etc. Whether it's Glendalough or a tour of Dublin city centre, are all part of that. You know.

Speaker 1:

Yeah, I mean the point that you made there about, um, social isolation and community. I don't know if you've got a chance. I say you know the thing about Portaferri, or if you'd seen about Portaferri, about the co-housing thing that they do in Northern Ireland. It's not the same thing at all, by the way, but I think it's just interesting that there's a very different attitude outside of ireland to all this kind of stuff. Right, so in the north, and we'll put up a car, I'll put up a link to port of ferry. It's where they're just sort of saying well, we're going to build lots of different types of tenures in the one place, so we're going to put old people with young people, so that we don't end up with these sort of ghost streets where there's a whole lower houses with 90 year olds in them, and then the students are, you know, somewhere else.

Speaker 2:

The planning that O'Connell and Properties got in Cork. Henry J Lyons did. It has a similar idea. You know they're, they're large. They actually can't build it because, planning again, the fertilizer business that's in there is meant to move and they couldn't get planning to move because they have to build a new bridge, mon Ireland. Yeah, exactly, because the whole port in Cork is moving down into the harbour, down the river, okay, and it's freeing up a lot of development land in the city itself. But again, it was stage of life. That was their whole planning idea.

Speaker 2:

Why can you not? For example, you have a large site, you want to achieve density? Okay, rather than say, than say just doing all apartments, you could do some more high density co-living or other forms of high density apartments which might be allowed in the future and are allowed in other countries, but then you could sit them alongside actual family houses and then you could actually stick in a senior block, yeah, and that's all in one community. You families, 25 to 34 year olds and say, 65 to 80 year olds, yeah, all living together in a specific or circumstance, specific housing, yeah, like we just have such an idea of one size fits all, like they were all just going to buy something and live in it forever? Yeah, but how many? Like anyone from, when I left Cork and moved to Dublin, I must have lived in about, I'd say, five different rental properties in about eight years. You know, you know you move around, you get a promotion oh, I've got a bit more money, I'll get a nicer place. You know you meet someone, you move in with them.

Speaker 1:

You know there's so much happens, particularly in that earlier age and when you're younger you want to be with, like your mates and this is the other thing that drives me insane about this like ban co-living. Co-living is happening everywhere in Dublin, but it's just in an old house that has seven bedrooms. Yeah, and these bedrooms are being traded essentially on a grey market. Yes, and actually in Rathmines, a group of my friends lived in a house called the Casa and I don't know how many people lived there over the years, but it was a lot. That's co-living. It had one kitchen.

Speaker 2:

Yeah, yeah, and wasn't professionally managed and cleaned.

Speaker 1:

Oh, it was the absolute opposite of being professionally managed, whatever that is, yeah, you know. So this idea that we, you know, I have it in my notes here Minister O'Brien's directive restricting like it was a ban yes, they banned it. They banned it because of political kind of craziness Like what, was there something that happened?

Speaker 2:

Well, I think Owen Murphy and he's admitted this himself since got the PR all wrong. He got very bogged down in it. Yeah, he started getting questioned on it and he was like nearly fighting his corner too much rather than just being very guys. This is a stage of life, part of the solution. Yeah, you know it's 0.05% of bed spaces have got planning in Dublin. Yeah, it's for a particular segment of the market. You know you need to move on. This is what you know. There's a lot bigger things happening here, but he got very bogged down in fighting it, yeah, and then everyone just it was a big pile on. Basically, yeah, populous pile on, it's more that them and us thing right.

Speaker 2:

Monday tenements carry on.

Speaker 2:

Yeah, If a developer wants it to be stopped Exactly Playing the man, not the ball, the usual carry on so and it was all that. And Darrell O'Brien, when he was in opposition, made hay on that. And then when he got in he ordered a report. The report is actually from the Department of Housing, is very like the stuff I would disagree with in it, but it's actually a good report and it's actually, when you read it it's clearly pro co-living and it's trying to nudge him that way. And it gives him four options, three of which are keeping it and with just different bits. One it stays where it is and we update the guidelines. One we take it out of apartment guidelines and create its own guidelines. And then one we just kind of stay silent on it. We remove the guidelines but we let it up to local authorities. And then, number three, number four, sorry, we ban it. And then the second paragraph says just so you know, minister, nothing has ever been banned by ministerial order, by ministerial planning guidance. It's the only thing ever.

Speaker 1:

Oh, and nuclear power stations. Nuclear power stations and co-living they're the only two things.

Speaker 2:

Yeah, yeah I think nuclear power stations is done legislatively?

Speaker 1:

I'm not sure.

Speaker 2:

But for ministerial order, like ministerial planning guidelines. It is the only thing to have ever been banned and it was a pure political decision.

Speaker 1:

Oh, what urgent action right.

Speaker 2:

I'm sorry, and we all and you know there's a lot of banging on in Ireland and you know a lot of it, rightly so, about that. Our planning system has to be democratic. What's democratic about one man with a stroke of a pen banning a form of development? You know?

Speaker 1:

So, yeah, well when people say they want the planning system to be democratic, what they mean is they want it to be for their, their opinion to be. They don't mean it to be democratic because, you know, we have elections, we elect governments, they appoint planners, they make decisions, and then we just say, yeah, but forget about all that, because we're going to have a judge overrule that. Yeah, so there's again one man yes and it is almost always a man, by the way who's just saying no, yeah, so there's nothing democratic about any of this that's just like a veil of bullshit that we absolutely know, oh, it's very consulting.

Speaker 1:

I mean it's absolute nonsense, but okay, it got banned. But before it got banned, there were some planning permissions granted. There were Yep, you guys have mine's house, you have another one on Cork Street. Yeah, liberty's house, yeah, which?

Speaker 2:

is going to is actually quite close to PC.

Speaker 1:

Okay, and how many bedrooms is that? That's 371. Okay, so that's. Is that the biggest one? It is In Dublin, right, yeah, yeah.

Speaker 2:

We bought that planning. We didn't plan it ourselves. Okay, because we couldn't. Yeah, right.

Speaker 1:

You know there was some like head's teeth at the end.

Speaker 2:

Yeah, it has differences to Ratmine's house. It's obviously larger, it's more of all one type 18 square meters, but it's got a kick-ass ground floor and basement amenity space Okay. Ground floor and basement amenity space Okay, like it's really off the charts. We brought in a concrete Amsterdam based interior architect to work on it, okay, and I think they've done a fantastic job. Oh, excellent so it will be amenity wise, I think it would set a new Okay, and when's that opening? First resident 1st of September, okay, so very close by, yeah, yeah.

Speaker 1:

Yeah, yeah, yeah, yeah. I must try and head over and have a peek at that.

Speaker 2:

If it was Absolutely, by the way, I'd say everyone I mean everyone is welcome to tour any of our assets. We really want to get the word out there. Yeah, you know, because a lot of people come to my house and go. Oh my God, I and you're like what did you think? It would be, or they're shocked that it's not a tenement, Exactly yeah. Do you think there'd be like?

Speaker 1:

no more than the floors. We must look up who called them tenements because it was.

Speaker 2:

It was one councillor, was it yeah?

Speaker 1:

So that's so. Is that you guys for co-living? Did you have any other ones? That were, and so it's past the point now where the plannings are going to be expiring, are they? It's too late to.

Speaker 2:

Well, there's one above Jervis Street car park, but I hope you get to oh God in heaven. Yeah, yeah, yeah and actually there's a fantastic one in the Players Factory, but I don't know where that's all left now with the judicial review et cetera, and will that get extended or will they build it?

Speaker 1:

going to extend the plannings? They said, yeah, I guess they won't be extending the co-living planning.

Speaker 2:

Yeah maybe not, I'm not sure. Yeah, but it is. It is very cool really, high ceiling heights. You know it's got the big massive windows, oh, yeah, yeah no, probably be an expensive job, but and a really cool ground floor area, like the plans of it are very cool. But we are we're starting to look in abroad now, to be honest with you, we're looking to uk and just for for the context there.

Speaker 1:

Is it banned anywhere else in Europe?

Speaker 2:

Oh no, they're embracing it. In fact it's gone the other way. So it kind of started in the UK. Well, you know, stuff got built in the UK on other plannings hotel planning, student planning, right, okay, like planning. Like Irish planning is so prescriptive, and other places it tends not to be as prescriptive. But so in the UK kind of laid it out there in Ireland, in the UK, and it continues to grow in the UK. Madrid has recently brought it in. Now it was already happening in Madrid, but the local mayor got his arms around and said, all right, let's actually put some structure around this. So it's happening in Barcelona, it's happening in Amsterdam, it's happening all over the Nordics, obviously happening in Germany, where they have all types of you know, they have everything from, you know, senior housing, micro apartments, co-living.

Speaker 1:

They're very open that way so pretty much the only place that is banned and not happening is Ireland, wow so I just you know because and I get criticized for it I don't want this to turn into like fucking Ireland yeah, yeah, yeah even though it is and we all know that the economics of it.

Speaker 1:

So you know we're apartment, what we were um. The news is that now apartment developers, the economics of apartment development now, are just shot in Ireland. There it's forget it, you can't do it. They're different for co-living. If we magically got rid of ministers ban, you'd be able to still do it. Absolutely. Yeah, what's driving that? Is it like pure, like revenue per square foot basically?

Speaker 2:

yeah, it's like a student, you know. Yeah, I know in your recent article you'd say, yeah, we're doing some student stuff now because that's, and we look at that and say, well, actually it's very similar to an apartment building.

Speaker 1:

You know it's more like it's an eight bed apartment, yeah, and you know the revenue per square foot significantly higher as a result of that, exactly, yeah, yeah, yeah, yeah and like and the revenue per square foot significantly higher as a result of that.

Speaker 2:

Exactly, yeah, yeah, yeah, yeah, and like and the revenue per square. You can just rentalize more space.

Speaker 1:

And no parking and stuff like that no parking.

Speaker 2:

Exactly, yeah, that's the main reason. Like your cost is student and depending, you know, you probably have nicer amenities student a little bit plus, maybe Okay. Student a little bit plus, maybe okay. In terms of your cost per square meter, yeah, but it is exactly that you can really drive your rent per square foot because it's just a more efficient build. You know, it's kind of if you look at ratmine's house, you walked onto a corridor in ratmine's house or liberty's house, you think you're standing in a hotel. You know it's a corridor right with doors, you know. And then you have your communal spaces on each floor and a communal space down below so.

Speaker 1:

So that's on a per floor basis that you do the kitchens and stuff, yeah, which is something peculiar to Irish co-living.

Speaker 2:

In the main, the UK they centralise a lot more of that and Ireland again they have this idea around student of clusters and therefore each cluster must have a kitchen.

Speaker 2:

Wouldn't it be better if there was one kitchen, because then there could be like 20 people there, like it would be way more fun, exactly, and we've ended up in Ratmine's house with a lot of space that's underutilized, yeah, so we have these great kitchen lounges on the south west corner of the building stacked on top of each other. Okay, and they're beautiful spaces, great spaces, but we struggle to activate them, like we've activated the top floor one, because it kind of made it into a cocktail lounge vibe and we have Friday night drinks there and stuff oh cool yeah.

Speaker 2:

So we tried to theme them as we went down. We've won, that's got some co-working in it, and then we've made one into kind of more of a games loop vibe. So we find that we can activate some but to act like they just all don't get used all don't get used.

Speaker 1:

You might have one person in one on one floor at one particular time and it's probably over provisioned. Like all immunity space in ireland like we have this with the apartment buildings too, we've really nice immunities it's way over provisioned like, yeah, like you've eight square meters per unit, like it's a lot.

Speaker 2:

It works a little bit better in liberty's house because bigger, so we have a bigger ground floor area, yeah, and so we've kind of you know an, you know an open plan ground floor area, which hopefully we will be able to activate That'll attract people right? Yeah, exactly, and hopefully we can activate that. Okay, and, as you know, the gym is the most used space.

Speaker 1:

Yeah, yeah, depending on the day.

Speaker 2:

Yeah, absolutely, and we find that that's the one amenity.

Speaker 1:

But the construction costs are otherwise broadly similar, like per square foot right to student.

Speaker 2:

Yeah, broadly similar to student, but it really lends itself to restricted city centre sites it lends itself to office to resi which Ratmine's house is.

Speaker 1:

Yeah, because that office to resi because this is another thing that drives me mad is people going on about the office to resi Like, oh, we convert them into apartments, affordable houses? Yeah, Talking through their hole, absolutely. We convert them into apartments, affordable houses. Talking through their hole, absolutely.

Speaker 2:

Because you can't do it right like we I don't know how many we looked at it's not possible to do it right no it's not, but it is possible with student, it is possible with co-living and it is possible with hotel and that's why Dublin City is refusing plannings and a number of conversions, trying to get people to do resi. Yeah, so the one above the on post inside in town which they refused planning, yeah, the developer quite rightly went on board and said this is zoned for hotels.

Speaker 1:

Why are they not allowed to build a hotel here? Yeah?

Speaker 2:

And you can see what you know Dumb City are trying to push people towards residential, but that doesn't work. You need some pull, and that pull is viability, and you get that through allowing more flexible forms of accommodation.

Speaker 1:

Because it's just a. It's a pretty basic thing, like most office building, like their, the grid that they're built on doesn't allow you to comply with the guidelines for apartments, right In terms of aspects, dual aspect being Dual aspect, daylight, sunlight. Like you can't, no, do it, you've got to cut a hole in the middle of the building, yeah, and then you might as well knock it down, and they won't let you knock it down because it's carbon emissions. Yeah, yeah, so you know it's a bit of a bind Chinese finger trap. Yeah, so you're going abroad.

Speaker 1:

Yeah, we're starting to look.

Speaker 2:

Yeah.

Speaker 1:

I saw the other day that you have a UK division now. Yeah, we've opened the.

Speaker 2:

UK office, james Ghent, who we used to work with, so myself and Tim found a business. Then Dave Hickey joined us and Dave was in Goldman and James used to work with him there. So James has joined us now as well. I'm very excited about that. James is a great guy. He's got loads of ideas and is getting stuck into them, and one of them is bringing our co-living model and operating platform to the UK To the UK and elsewhere.

Speaker 1:

I assume then after that, yeah, I think UK is.

Speaker 2:

we've looked at Madrid previously. It's just language law planning bit of a leap for us. Yeah, no habla espanol.

Speaker 1:

You have to, you have to learn. I mean, it's the thing. It's not that simple in Europe. No, because once you leave the the uk, things are quite different.

Speaker 2:

Yes, um, we found that too, looking abroad, and you go, yeah so, look, I think that's that's definitely an option in the future and possibly, like we kind of skirted around milan previously, but I think now we've changed in the uk. I think london's very suited to this. Yeah, there's a lot of office to raise the opportunities, yeah, in some good areas actually, and so that's pretty exciting and they have a much different.

Speaker 1:

I mean, I know that the planning rules are different, but they have a much different attitude to things like this too, when it comes to converting, you know, because in the uk you can convert an office to other uses without planning permission in some cases permitted use, yeah, yeah, yeah, um, which is a real like it's. It seems to be a much more forward looking yeah attitude.

Speaker 2:

I presume there will be issues like you know it's never.

Speaker 1:

It's never, simply, yeah, they have nimbies too, right, they're everywhere they seem to embrace.

Speaker 2:

Co-living is the main thing. Yeah, they have new guidelines for london which are not far away from what we're building in Ireland actually A bit more sensible around the dining lounge space, but a similar enough concept and I think we could definitely bring our expertise and our learnings from Dublin over there. And build some cool kit hopefully.

Speaker 1:

What about the appetite like from capital providers? What's the appetite like from capital providers? What's the appetite there from from investors? Do people want this? Are they? I mean, I know everyone talks about beds and sheds. Right, it's like I've got a great strategy.

Speaker 2:

No one's thought about, yeah, exactly, beds, and sheds.

Speaker 1:

But you know, this is kind of a it's not that common right in the. I mean, I know it's in the uk but it's not that common is there a good? Appetite out there from investors for it. There is absolutely yeah, yeah, yeah.

Speaker 2:

Look, there's a bit of education, like anything, but a lot of investors are looking for alternative bed strategies which give them a slightly better yield and cost, particularly in the current industry environment. Yeah, probably why we're seeing a lot of sort of of all things hotels, most probably why we're seeing a lot of sort of of all things hotels and students at the moment and less resi, because it's just yielding costs is shocking and co-living gives you that. So and then for us having the operational expertise from Ireland and able to show them what our tenant looks like, how long they stay, for you know how much it costs to run the building. That takes a lot of the mystery out of it, because then it's just, this is just a bed strategy with a higher yield and cost. I can get comfortable around all this stuff because guys have all the data and off you go. So that bit is not difficult, a bit easier.

Speaker 1:

Your strategy then. Do you see it focused on the co-living thing in the UK or maybe in Europe, or do you have a wider plan with your platform to have it across different living sectors?

Speaker 2:

Yeah, I would love to extend into traditional apartments PRS, BTR, whatever you want to call them. I think that would be a natural move for us. Good cross-selling too. Right, Exactly, Exactly. So you know, someone's coming to the end of their one year in Ratmine's house, yeah, and you're going. You can extend in Ratmine's house. Or here's a one-bedroom apartment in Dundrum. So I think there's great synergies there. Yeah, there would be. So that, and that would have been my Irish strategy as we were going and building the co-living. Unfortunately, massive viability issues currently in residential, so that'll have to a pin will have to be put in that for the time being.

Speaker 1:

Yeah, yeah. And what about like nursing homes or senior care? So we're already, we're in nursing homes.

Speaker 2:

Okay, all right, I didn't know that. Yeah, yeah, yeah, so we're building a platform there as well.

Speaker 1:

Okay, How's that? Because you read a lot in the paper about, you know receiverships and companies. Are you also doing the operational side of that?

Speaker 2:

Well, yeah, companies, how are you also doing the operational side of that? Well, we have an operational team which is separate to us. Okay, guys, we trust to know ethos care, who are doing a fantastic job. Okay, all right. So we built that, though, from scratch, brought people with nursing home expertise together. Okay, we worked with them and we brought in the capital. Then, um, okay, back it as well. So we'll be at target is 1500 beds and we're, you know, I'd say over a thousand. Now, anyway, yeah, wow and good business. People are still getting old. Exactly, yeah, it as well. So we'll be at target is 1500 beds and we're, you know, I'd say over a thousand.

Speaker 1:

Now, anyway, yeah, Wow, and good business. People are still getting old, exactly, yeah, yeah, yeah.

Speaker 2:

Yeah, and look it's a it's, it's a space that again has had its issues. I think once you're focused on the resident and care and build from there, you can. You can do it properly.

Speaker 1:

Yeah, are you developing them from them from scratch, like a?

Speaker 2:

lot of things in Ireland. You can mainly buy them for less than you can build them yeah. Isn't that crazy. Yeah, it's such a matter Like that alone is such an issue for a society. Yeah, you know, it's just I'm going to leave that there, and I could go into that for ages.

Speaker 1:

No, but it's true. That week I was trying to explain to Killian Woods. We have apartment buildings that are five years old, that are not worth what it would cost to build them today. Yeah, that's insane. It's insane. Yeah, you know exactly. I mean, they're modern, yeah, a-rated like yeah, and we couldn't do it today.

Speaker 2:

No, exactly yeah, and so it's the same in our students in Dublin. You can marginally build them, but we are building one in Dublin at the moment. Yeah, but we're more doing it because we want that Dublin presence, the returns.

Speaker 1:

Yeah.

Speaker 2:

So this is the lowest returns of our portfolio the one we're building, the one we're taking development risk on, not the one we're buying and plugging in. And like you buy all, some you buy off receivers, some you buy off people who've run them very well but just are the time of life when they want to retire or whatever. And COVID, I think, knocked a lot out of a lot of those sort of owner operators. But yeah, the lowest returns, you know, in our portfolio are the one we're building.

Speaker 1:

So upside down stuff, isn't it?

Speaker 2:

Yeah, and so we're doing that. Senior care, I think, is a very interesting space and it's kind of amalgamated a lot of those sort of expertise we have from the residential side and then from the clinical side and nursing homes. Again, though, we've a complete lack of inflexibility in our planning system. There's lack of inflexibility in our planning system. This one size fits all again we have, this is an apartment, you know, and of course they'll say to you oh well, you know, if you go to the planning party, they might, you know, they might allow you do this. But you're like, but I don't have to go, I have to buy the site, go talk to them. They go no, no, we're not allowing you to do that. You know, when you're building senior accommodation, it's probably it's a lot of one beds and then it's amenity space.

Speaker 1:

Yeah, that's what gets built internationally and they have to be designed a bit differently. Right, the bathrooms and everything have to be designed for people of an older care and then you can't, yeah, transform that into something for someone who's 30, exactly afterwards. So there needs to be a designated class. Yeah, yeah, and they've been talking about this for 10 years. I know we we had a Docky years ago and you know it was back when the things weren't really going that well. It was hard to get planning. We thought, you know, maybe senior care I mean, it would be ideal, right, it's like chimney pots very mature area. 10 years have passed, nothing, yeah.

Speaker 2:

So actually I have a good table which shows in Germany all the different things you can build. You know, and it includes all that you know, obviously, your regular apartments, your senior senior apartments, you have your micro apartments, you have your co-living. In Ireland we have an apartment which is meant to suit everyone from the age of, say, 21 to 80.

Speaker 2:

Regardless of your financial circumstances, regardless of your financial circumstances are your time of life where people just need different things. And again, sorry on the senior care bit like lots of loneliness, lots of social isolation. Yeah, imagine having those people living in lovely one bed apartments.

Speaker 1:

Because they're not people that need to go to a nursing home. No, they're just people that maybe are on their own a lot of the time, but they'll have a trip or fall button where the concierge will come up to them and say, oh, you're not.

Speaker 2:

okay, now I'll ring the doctor, or whatever you know, and you can have varying levels of clinical care in them, yeah, and it even you know to a degree as well it allowed, say, one partner is quite ill, yeah, and the other is perfectly healthy, and they could stay together. They can stay together, you know so. There's so many advantages to it. But again, we just can't grasp that nettle.

Speaker 1:

I will rant on that. So that's a dereliction of duty on behalf of policymakers to not have something like that in place, absolutely Like you're just letting people down there. Yeah, yeah, because people would build that stuff right, of course they would. It's like it's a guaranteed market segment.

Speaker 2:

Yes, everyone gets old, exactly and, by the way, other massive advantage we obviously talked about all the empty nesters.

Speaker 1:

Yeah, and all the houses right free up all the homes I know, but like you'd be blue in the face telling people the housing, you know the housing ladder, yeah, there's two types. There's the one like you want to buy your house and get more valuable, but the housing ladder is stages of life. Yeah, yeah, but there's just like anyway, there's no point. I asked you here because I wanted to talk about Colibri we have done that, but I what I, what I kind of want to get to, is All right.

Speaker 1:

So there's a multi-strand question here. Do you think there's any possibility of the ban being reversed? Right, and rather I assume the answer to that is yes, but what's your pitch? Why should it be reversed? Do you think that there's a political off-ramp for the government with this?

Speaker 2:

Yes, I do. Well, first thing, they should do like they have a report from the Department of Housing which is very pro-co-living. As I said, it's a report provided to Darrell O'Brien. He took option for yeah, so they can start with that. Okay, so this is coming from within the department. Okay. And I also think there's a political off-ramp in that there's a certain amount built and they can go and say well, we don't like this, we like that, so they need to engage with industry, something they're not great at. They can also then look at what's happening internationally. So within all that, there is definitely a way forward. I think I spoke about the benefits of it. It's a stage of life product which has massive benefits in terms of the socio-economic system within our larger cities. Okay, oh, we draw a lot of people to them, whether we like it or not.

Speaker 2:

Yeah, we've a lot of multinationals hiring people from all over the world, and they should not be living in hotels. Are you know the like which they are? Yeah, from dublin to cork to gal, so it provides a great landing pad there. So it's definitely needed. It definitely has international acceptance and we just need to get over the populist angle that was preached about it. And the way to do that is to educate people, and educate people by showing international example and showing what has been, on a positive sense, delivered in Ireland. I'm not saying every co-living development is positive or well done, but there is enough evidence there to go. This is what we want.

Speaker 1:

Yeah Well, because not every residential development is well done, or?

Speaker 2:

is positive either right, Exactly.

Speaker 1:

Yeah, yeah, yeah, nothing is perfect, but no, it just yeah, Like when you put it in the context of it's the only thing that's been banned by ministerial order.

Speaker 2:

I'm sorry to hit another point here. To hit our 50,000 units, we are going to have to increase density, and to increase density, you know, we're going to have to allow things like co-living and other flexible, high density accommodation, and even then, even then, right.

Speaker 2:

But look, everyone derided on Murphy 2018, we were building 2000 apartments. He tried and did some very good things. Everyone derided on Murphy 2018 we were building 2000 apartments. He tried and did some very good things. We got to about 10-11 thousand and going up and going up. Yeah, now we're going the other way, since someone banned co-living and BTI.

Speaker 1:

They went fucking with it, right, exactly. And this is the thing that drives me crazy. When they brought in, say, the RPZ and this is the thing that drives me crazy. When they brought in, say, the ORPZ, the rent control, that was just. It was when they brought that it was just starting to get hard for us to let apartments. Yes, we were starting to see a bit of vacancy. Yes, right, and they're like now is the time to halt construction. Yeah, when we're just getting to the point where rents are flatlining, and then they just sent them back. I mean, actually, they think that this is the funny thing. They always think there's like greedy developers. Orpz was the best thing that could have happened to a lot of people because it choked off supply well for developers in particular.

Speaker 1:

Yeah, and it drove rents up yeah, like now, it was very short term, because now the developers are screwed because you can't build anything. Yeah, but you know, for that brief period actually assets that were under construction already Orpy said was fantastic Absolutely Because it choked off future supply and there's no competition and now we're running at 99% occupancy.

Speaker 2:

Yeah, yeah, exactly, and only going to get worse. By the way, like there's actually some the end of the Owen Murphy era, particularly in the city centre, if you have, etc. Will be delivered over the next sort of six to twelve months. Yeah, after that there is nothing. Yeah, there's nothing. There's nothing. Yeah, it is going to like, obviously, presuming the economy is on the same track, it is going to be an absolute mess.

Speaker 1:

I actually don't. I don't believe that people fully, and we always say that all the time. The problem with the property is we just talk to each other. Yeah, yeah, we all live in a bubble. I don't think it's well understood just how little construction is going to be ongoing, uh, in a year's time. Absolutely, particularly apartments, really bad.

Speaker 2:

Yeah, yeah, yeah, sorry, unless it's government backed, you know, lda or whatever you know, and sorry that's even run into a speed bump recently.

Speaker 1:

So um, well, I mean, they're like that's another thing, the lda. They're able to buy apartments cheaper than they can build them. And yet, like the government solution appears to be like pouring money into the LDA to build more apartments. It's just like more and more and more money every year, same result, yes, inefficient solutions. Why not turn around and change it Like? To me, it seems like co-living is such an easy win.

Speaker 2:

Just do it, yeah yeah, it's not going to take over the world, by the way, no, like it was 0.05% of bed space, as I said, if that gets up to you know, 0.1% or whatever it is, but it is essential, I believe, for our future sort of economic prosperity in terms of attracting young professionals to these cities, because, yeah, you know where are they going to land, where are they going to live um, okay, look, I've kept you here for an hour.

Speaker 1:

Uh, peter, final thoughts on anything really. Um, and then I have the magic wand. Okay, you can have your magic wand if now, if you want it. Okay, now the rules. Yes, because you have people going on a 10 minute magic wander, right, okay, it's one's one thing. One thing you can change, one thing.

Speaker 2:

And not co-living.

Speaker 1:

obviously you can change co-living if you want to use it.

Speaker 2:

on that yeah, okay, wow, you know Apartment size standards.

Speaker 1:

Really Okay. Yeah, and what would you do to them? Make them smaller?

Speaker 2:

I'd make them smaller. In city central locations, specific locations. Yeah, I think we've got to embrace the micro apartment really Like. If you really want to produce affordable, you've got to look what they do in Germany. You know, and like Germany says, it has a rental crisis, but you can still get an apartment for 800 euros in a city center, you know Right.

Speaker 1:

You know, but like those apartments are pretty basic, by the way, just to say look at pictures online. They're not, you know they don't even come with kitchens.

Speaker 2:

A lot no no, yeah, exactly, yeah, yeah, I wouldn't go that far. Yeah, but you know, if you want to provide, you know, affordable accommodation, and not just like in the bang in the middle of dublin, but like in its suburbs as well, you gotta look at standards, size, standards no, it's not for every unit, but again, having some options, right, having options.

Speaker 1:

So how small is a micro apartment?

Speaker 2:

They start at 25 square metres, but they don't have then the bells and whistles of as much amenity and communal space.

Speaker 1:

So 25 square metres is a 25 to 40 square metres.

Speaker 2:

That's what size they are.

Speaker 1:

Okay, so let's take the smallest one right, Because people want to be alarmist 25 square meters.

Speaker 2:

King-size bed, yeah. Bathroom with a shower and no bath, yeah, full kitchen. Full kitchen dining table and chairs and a couch. Like you fit all that in 25 square meters easy, okay. Like we fit all that into 23 square meters in that mine's house, yeah, and perfectly livable spaces yeah, and if you had a lot of those.

Speaker 1:

And it's not saying every apartment needs to be tiny, no, but just some of them need to be tiny, exactly.

Speaker 2:

And we're not saying that, like, you can have big ones as well, and we're not saying we want like a family in there, no, but half the housing list in. And then you build them in the right places and everyone's focused. They're so focused on what's in the building, what's outside the building.

Speaker 1:

Yeah, that gets ignored altogether.

Speaker 2:

Like, what's the street? Like what's on the street? Where's the nearest park? You know, are we not meant to live as communities? Like, are we just meant to be in this? Little? Stay in here in my apartment. It's nice and big, I'm not going out to talk to anyone. Yeah, whereas they've totally got a different idea. In the continent, you go everyone like. Paris is always my example. Yeah, minimum size 25 square meters. The best living city in Europe, probably in the world. In the world, I would say yeah in the world and everyone goes.

Speaker 2:

Oh, in every corner in Paris, there's a lingerie and there's a cafe.

Speaker 1:

I wonder why. I wonder why.

Speaker 2:

Exactly Because it's the highest density in Europe. Yeah, it's not tall buildings, by the way no five, six stories, right in most cases. Right, that's what they are, but like you're telling me that living a 25 square meter like well kitted out 25 square meter apartment in Paris is not a great place to live.

Speaker 1:

Yeah, so you heard it here. First, we should all move to Paris. You don't have to convince me. Yeah, I fucking love that place and, like you say, yeah, there's bakeries everywhere, there's parks everywhere. There's stuff to do. Read any books. I didn't tell you about this in advance, so it's really not fair to spring in on. You do read a lot of books. Yeah, what's the last book or last good book that you read?

Speaker 2:

uh, the robert fabry series called alexander's legacy, and when alexander legacy, and when Alexander the Great died, he didn't name an heir, he said to the greatest. So all his generals basically started fighting each other for the different territories. Hunger Games, hunger Games, exactly, yeah, okay. So Ptolemy obviously ended up with Egypt, for example. Okay, syracuse ended up with Persia and Syracusian Empire came out. So the number of great sort of ancient world empires came up out of it, because Alexander, in his mad rampage through the East, had conquered all these places and kind of drove on and left Othello in charge. And then they all, they broke it up and there was a massive, basically Greek civil war for a number of years and they all ended up with their little patch afterwards Fantastic.

Speaker 1:

Yeah, so like a deconsolidation. Yes, exactly, I wonder, did they have co-living? I mean, they probably basically did have co-living. Of course they did. There was no other options.

Speaker 2:

A country village is co-living, by the way. Yeah, yeah, actually, that's All the little little cottages. Yeah, local pub, yeah, it's your communal space. You know like that is actually. You know everyone says we've lost that sense of community. You wonder why. You know.

Speaker 1:

Yeah, because we're all inside on our phones. Yeah, exactly.

Speaker 2:

Yeah.

Speaker 1:

In Deliveroo. Yeah, peter, thanks so much. There's a lot in there. Um, I remain to be. I just think I I just don't understand it. It's, it's such a stupid thing to kowtow to a few newspaper articles about a name call. I mean, it's still. It's like the name calling the vulture. Funny. It's the same old thing again. One section of people decide they're against something, they start name calling and mudslinging. Government panic yeah, press the panic button. Yeah, everyone suffers exactly down the line so like I don't.

Speaker 2:

Yeah, I mean, that's a surprise, it's not like we've heard this story. Yeah, a million times a million times unfortunately yeah, well, hopefully it'll.

Speaker 1:

It'll turn around and change, because we do need these things, we need different things, we need senior living, we need co-living, we need everything for stages of life and, uh, I wish you all the best. I I look forward to having a visit down to to quark street. I think that's going to be that's. Uh, you're coming to me to see that too? Absolutely, yeah, that's your target. I mean, I know not you, but like it's. It's targeted to people like you, if they were around yeah, that's good to hear.

Speaker 2:

There you go, yeah excellent.

Speaker 1:

All right, peter, thanks a lot. We'll leave it there. Very much, guys, that was great the build is produced by carrie fernandez and me rick larkin. Music is by Cass.