Uncertainty around future regulations is frustrating investment in Ireland’s undersupplied housing sector, investment firm Elkstone has warned.
In its latest assessment of the private investment market, Elkstone claimed the regulatory environment here, in particular the system of rent controls, had created “a paradoxical situation where, despite clear structural supply deficits similar to other European markets, Ireland’s development pipeline is stalling precisely when new housing is most desperately needed”.
The Government’s rent pressure zone (RPZ) system which limits annual rent increases to 2 per cent or inflation (whichever is lower) and which expires this year is currently under review.
While the industry wants the rules loosened, Opposition parties claim they keep already high rents in check.
“Rental caps introduced with the intention of protecting vulnerable tenants in our tight housing market have created an unintended consequence by capping growth for rent and investments,” Elkstone’s chief investment officer Karl Rogers said.
“Increasing construction and financing costs are becoming locked into projects, making many developments financially unviable for developers,” he said.
Elkstone’s report also warned that the Irish energy regulator’s moratorium on new data centre approvals was redirecting potential investment to competing European markets.
“This infrastructure bottleneck represents an opportunity for private investors in renewable energy projects that could alleviate capacity constraints while supporting Ireland’s climate goals,” it said.
Elkstone, best known for its investments in start-ups such as Flipdish, LetsGetChecked and Manna, said Ireland’s economy is forecast to grow at a pre-tariff rate of 4.2 per cent, in gross domestic product (GDP) terms, outpacing the euro zone. Yet this masked “potential vulnerabilities in an economy heavily dependent on FDI [foreign direct investment], with President Trump’s recent trade policies and tariffs creating significant uncertainty for Ireland’s multinational-driven economy”.
“These potential vulnerabilities could be counterbalanced by developing a stronger domestic tech ecosystem through Ireland’s underfunded venture capital sector, which currently lacks institutional investment and needs a domestic venture champion to nurture local start-ups,” it said.
