Dublin's private rented sector proves to be investors' choice
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Loading... - Kathrine Palmer
- 23 Dec 2021
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The multi-family/private rented sector (PRS) market is now the most active property investment class in Ireland. It has grown steadily since 2016 and in that period, with financing of more than €7 billion from Irish and international funders and investors, it is facilitating the construction of more than 12,000 new homes, which when fully completed will provide accommodation for more than 25,000 people.
From a capital markets point of view, internationally we are seeing many investors re-allocating funds from offices and retail to the ‘living sector’ (including multi-family), logistics and life sciences, with an active focus on properties with strong sustainability and environmental, social and governance (ESG) credentials.
With the right conditions, housing supply in Ireland is well placed to benefit from this as the market continues to mature, underpinned by sound economic fundamentals, a rising population, low vacancy rates, positive portfolio performances and a need for new homes. However, a word of caution, ongoing national and local government interference is seriously damaging Ireland’s desirability as a place to do business – this includes the recent statement from the Central Bank on potentially restricting loan to values for property investors and also two Dublin local authorities making adjustments to planning guidelines, each of which, along with other recent changes, are seriously undermining Ireland’s ability to scale up housing.
The multi-family/private rented investment sector in Dublin continued to consolidate throughout 2021. Investor interest and demand for good properties remained strong. A number of major transactions have been signed or closed.
While most of the transactions in the market are forward sales, there are opportunities emerging for forward funding. Dublin will remain the main focus for transactions in the year ahead. More than 85 per cent of the multi-family developments in Dublin are taking place in the suburbs rather than the city centre. The conditions are right for increased activity in the wider counties of the Greater Dublin Area; and also, Galway, Cork and Limerick cities on suitable sites in prime locations, subject to viability issues being addressed.
Housing supply
The Government’s Housing for All programme can only be successful if Irish and international funders and investors are encouraged to play their part in funding housing supply in both the public and private sectors. By supplying accommodation at the middle and upper ends of the market, it is freeing up space at the lower end. However, there are significant challenges facing the sector as a result of building costs increases and planning issues. Read More…
