Saturday 22 September 2018

€5bn in capital targeting market for Build-to-Rent

The new town centre in Cherrywood in south Dublin will include 1,269 build-to-rent apartments
The new town centre in Cherrywood in south Dublin will include 1,269 build-to-rent apartments
Ronald Quinlan

Ronald Quinlan

AS MUCH as €5bn in capital is now targeting Build-to-Rent (BTR) opportunities in Ireland's residential property market.

That's according to CBRE's first bi-monthly report for 2018, which is due for publication today.

Unsurprisingly, the vast majority of investors' money is chasing opportunities in the Dublin market, where the demand for housing is at its most acute. Outside of the capital, CBRE notes Kennedy Wilson's imminent acquisition of the Elysian Building in the face of keen competition from a number of rival bidders as indicative of investor appetite for core product in the country's key population centres.

Turning to the market for development land, CBRE says it expects several sizeable land parcels and development opportunities to be brought to the market in the coming months. But while these lands are expected to become the subject of intense competition among prospective purchasers, the report adds that the market is "waiting patiently" for clarity from the Minister for Housing Eoghan Murphy on new standards on design and density.

Once that clarity is given, CBRE says it expects to see a "meaningful increase in planning activity and in turn much-needed development".

The report delivers an upbeat message on the prospects for the office sector, notwithstanding concerns expressed by businessman Denis O'Brien at the recent World Economic Forum in Davos that the Dublin office market is in the grip of a bubble.

On this, CBRE says: "The extent of new office supply coming on stream over the next three years appears well-controlled at this point with funding for speculative development remaining elusive despite the current underlying market dynamics".

Referring to the continuing appetite of potential occupiers for office space in Dublin, the report adds that: "The increase in large requirements activated over recent months (many of which don't need to move into new premises for a number of years yet) as well as the completion of a number of significant pre-lettings in recent months, has in turn provided the impetus for the next wave of development activity to commence in the capital".

Outside of Dublin, CBRE expresses some concern at the lack of standing stock available to companies seeking to locate all or part of their operations in Cork. On this, the report says: "While the pipeline of new office schemes gives potential occupiers some comfort, the lack of standing stock at present is posing a huge challenge for companies whose space requirements are more immediate". CBRE notes that just 34,479 sq m (370,994 sq m) - or 14pc of the total potential office pipeline in Cork is currently under construction, of which almost one quarter has already been pre-let or accounted for.

Commenting on the overall outlook for Ireland's commercial property market, CBRE head of research and executive director, Marie Hunt, said they are expect to see "considerable activity both from an occupier and investor viewpoint".

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