US investors reap dividends as home ownership falls
Home ownership in Ireland is plummeting among younger people, meaning that US investment giants can reap huge dividends.
Kennedy Wilson has credited the trend as it capitalises on the hundreds of apartments it owns that cost thousands of euro a month to rent.
The group - headquartered in Beverly Hills - has told its shareholders that "billions" of dollars are poised to be invested in apartment projects in the capital.
It confirms a seismic shift, in the capital in particular, towards renting, which for younger people is becoming the long-term norm.
Kennedy Wilson's newly published annual report also reveals that it booked a total $102m (€90m) gain from two transactions linked to the creation of a joint venture with an investment arm of French insurance giant Axa, as it seeks to capitalise on the growth in Ireland's high-priced rental market.
Axa initially took a 50pc stake in 1,173 units across three developments in Dublin that were previously wholly owned by Kennedy Wilson and a different equity partner. Those developments are at The Alliance, part of the Gasworks development; Clancy Quay, which is located at the former Clancy Barracks; and Sandford Lodge, in Ranelagh.
In October, Kennedy Wilson sold 411 apartment units across two assets in Dublin and one in Cork, that were wholly owned by it, to the new joint venture with Axa. Those developments are the Liffey Trust building in the Point Village, and the Elysian in Cork.
"The Dublin multi-family sector continues to demonstrate strong fundamentals, with 60pc of the population under the age of 35 now renting in Dublin and home ownership continuing to decline," Kennedy Wilson told shareholders in its new annual report. It added that Ireland benefits from the highest level of natural population growth in the European Union.
A two-bed apartment at The Alliance is currently up for rent at €4,500 a month. At Clancy Quay, two-bed apartments are for rent at between €2,000 and €2,200 a month. A two-bed furnished apartment at Sandford Lodge is quoting €2,700 a month.
At the Liffey Trust, a furnished two-bed apartment is for rent at €2,500 a month. A furnished two-bed apartment at the Elysian is currently quoting €2,977 per month.
Kennedy Wilson told shareholders: "A strong handful of institutions have announced new funds targeting multi- family assets in Dublin with billions of institutional equity available for this relatively new asset class for Ireland. A further benefit to the depth of the market is that the pool of buyers has expanded further with more institutional purchasers and purchasers from Asia."
Kennedy Wilson was part of the vanguard of international investors that began snapping up prime assets in Ireland during the depths of the downturn, recognising that at some point the economy would turn around. It has spent more than €1.5bn on properties in Ireland, and between this year and 2022 will spend more than $600m developing its share of projects in the capital.
Among the assets the group owns is the Shelbourne Hotel in Dublin, and it's been involved in a raft of development schemes, especially in the so-called Silicon Docks area. Last year, Kennedy Wilson sold two office blocks in Dublin to internet giant Google.
Thousands of apartments in the capital are now owned by property investment firms who are benefiting from a decade of underinvestment in construction following the downturn. Even now, the pace of home construction is well below what is required by the market given natural growth levels and immigration.
Investment firms have also been buying up entire apartment developments, further limiting ownership options for individuals.
Last month, Ireland's single biggest landlord, Ires Reit, said it made a profit of almost €120m from renting out its apartments in Ireland. It secured an average monthly rent of just under €1,600.
It owns nearly 2,700 apartments here.