Dublin hailed as top city for residential landlords
Dublin has been identified by German investment manager Patrizia Immobilien as "one of the top investment cities in Europe" in its latest report into the European residential market.
Patrizia, which has assets of €20bn under management across 15 countries, entered the Irish market in 2015 with the acquisition for €15m of 63 apartments at the Park Lodge development near the Phoenix Park in Dublin.
That purchase was followed up a short time later when the German fund paid €140m for the Oval office development on Shelbourne Road in Ballsbridge.
While Irish property values have experienced a strong recovery since then, the company returned to the market last September, acquiring hundreds of Build-to-Rent (BTR) apartments which are currently under construction at the Cosgrave Property Group's Honey Park development in Dún Laoghaire. Patrizia paid in the region of the €130m for 319 units, prevailing in the process against competing bids from Irish Life, Iris Reit, AIG, SW3 and Tristan Capital Partners.
Referring to the deal in Patrizia's latest European city rankings, the company's managing director for the UK and Ireland, James Muir, says: "One of the top investment cities in Europe is Dublin. The Irish capital stands out for sharply rising residential property prices and rents, as well as little new construction so far."
On the potential of the Honey Park scheme, Mr Muir notes that while Dublin's residential rental market is performing strongly, it is "characterised by an acute housing shortage".
Looking at the prospects for real estate investors, the report from Patrizia says: "The interest rate picture in the eurozone could hardly be rosier for real estate investors; after all, lending rates are below the zone's 1.4pc inflation rate (October 2017) - which the ECB clearly thinks is too low."
But while interest rates are expected to begin rising shortly, Patrizia remains upbeat on the opportunities for property investors owing to Europe's changing demographic profile.
"Europe's population is ageing rapidly. At the same time, more and more people are moving to large cities, where the residential rental market is often dominated by one-person households. Both factors make residential properties in urban regions an attractive investment for the long term," the report says.