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Foreign investors rush to cash in on our housing crisis

Spiralling rents mean Dublin is now the third-most attractive city in Europe for corporate landlords


Dublin city centre (Stock picture)

Dublin city centre (Stock picture)

Dublin city centre (Stock picture)

The housing crisis and spiralling rents have helped make Dublin the third-most attractive city in Europe for big property investors.

Rents have soared as a result of the shortage of housing, making it more expensive for individuals to fund their accommodation.

But that makes the city more attractive for big investment funds, who can get a bigger return as rents grow.

With supply in the capital continuing to lag behind what analysts believe is required, investors look set to do well for a number of years.

A report from accountants PwC has revealed Dublin is now the third-most attractive city in Europe for investors in property, up from seventh a year earlier.

The growth of big tech companies such as Facebook and Google is adding to the demand for housing.

The report said this was behind the growth of so-called "build-to-rent" housing, in which developers build whole apartment blocks to be sold off to big landlords.

Joanne Kelly, real estate leader at PwC Ireland, said big investors had shifted towards residential property in recent years.

"There is a housing shortage or lack of social and affordable housing in every major city across Europe," she said.

"In any market when there is a shortage of supply, prices go up. International institutional investors are looking at residential type investment as somewhere where they can get a reasonable return."

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Only Lisbon and Berlin were deemed more attractive than Dublin, with London down to 29th because of uncertainty over Brexit.

Dublin was also deemed a good place for investors because of the state of the commercial property market.

Offices are much sought after because of demand from tech firms, as well as the influx of companies caused by the Brexit vote.

Ireland's demographics helped too, Ms Kelly said.

"There's good economic fundamentals, the growth rate here has been one of the strongest in Europe, the demographics are good, there's net migration, there's a growing population here, and a young population," she said.

The development of sites around Dublin's airport and port is also tipped to provide good opportunities for property investors, through growth in the logistics sector.

Across Europe, seven of the 10 areas about which investors are most positive relate to residential property.

Student accommodation, social housing, and so-called "co-living" were among the top 10 most attractive areas, the PwC report said.

Co-living is similar to student accommodation, with residents having their own bedrooms but sharing the common spaces, such as kitchens and living rooms.

Separately, a report from the Banking and Payments Federation of Ireland (BPFI) said that housing supply probably would not match demand for three years, notwithstanding supply growth this year.

"If dwelling completions were to continue their strong growth rate of around 25pc in the last quarter of this year, new dwelling completions should be around 18,000 units for the full year," said Dr Ali Ugur, the chief economist at the BPFI.

"Assuming a growth rate of around 25pc per annum in the short term for completions, it would take until 2021 for supply to meet the estimated demand of around 35,000 units per annum.

"As long as the construction sector does not hit any significant blockages in terms of staff requirements, completion numbers are likely to be around 22,000 units in 2019 with current growth rates observed in commencement numbers."

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