Sunday 18 March 2018

Investors have €5bn available for Irish build-to-rent housing schemes

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.

While build-to-rent (BTR) is a long-established sector of property markets internationally, it is a relatively-new phenomenon here. Typically, it is popular with institutional investors such as pension funds as the rental incomes from letting residential units in large numbers provide steady returns over many years, and through the peaks and troughs of economic cycles.

An analysis of the sector conducted by CBRE as part of its first build-to-rent Equity Barometer last year showed that in the case of the US alone, BTR amounted to a $250bn debt and equity market.

Referring to the sheer weight of capital available in the US and internationally, CBRE's director of development in Ireland, Tim McMahon, urged the Government to facilitate the BTR model here. Leaving aside the much-needed development funding BTR could provide, Mr McMahon noted how it allows for the rapid delivery of new homes at scale - a factor which should make it attractive to the Government as it seeks to tackle the current housing crisis.

Cork’s Elysian Building. Photo: PA
Cork’s Elysian Building. Photo: PA

US-headquartered real estate investors Kennedy Wilson and Hines have already demonstrated their commitment to the BTR model here.

In the case of Kennedy Wilson, the director of its Irish operations, Peter Collins, has said the company wants to increase the number of residential units it has to let in Ireland to 5,000 within the next four years. Kennedy Wilson has 2,100 units either built or subject to planning permission here.

Meanwhile, Hines has submitted a plan for 1,269 BTR apartments at the new town centre it is developing at its Cherrywood residential and commercial scheme in south Dublin.    

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