Axa enters Irish private rented sector

Axa Investment Managers – Real Assets, the asset management arm of the French financial services giant, has entered the Irish private rented sector for the first time, taking a 50 per cent stake in a 1,173 residential property portfolio with Kennedy Wilson. It's understood that Axa and Kennedy Wilson may add grow the portfolio of the joint venture in time.

The announcement comes as rents continue to rise at pace across both the capital and the country; the latest Daft.ie report showed that rents rose by 11.5 per cent nationally in the year to March, while rents are now 23 per cent higher than their Celtic Tiger peak.

Axa will take an initial 50 per cent stake in a portfolio of some 1,173 properties which are on the private rental market, comprising the Alliance, Sandford Lodge and Clancy Quay, all in Dublin city centre. The Alliance, part of the Gasworks development in Dublin 4, consists of 210 apartments; Sandford Lodge in Ranelagh has 119 units, while the first phase of Clancy Quay has 423 apartments, with the second 163 houses and apartments. Kennedy Wilson has also submitted a planning application to add a further 259 units on the site.

The joint venture said it also had “a strong pipeline of additional investment opportunities that are in line with its strategy of seeking PRS developments or operating assets across Ireland, targeting Dublin and other large urban centres”. Kennedy Wilson will act as asset manager for the JV.

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Market dynamics

John O’Driscoll, European head of transactions at Axa IM – Real Assets, said: “We are long-term investors in the private rented sector and this transaction adds to our existing global residential portfolio which is valued at over €9 billion. The portfolio is well placed to benefit from Dublin’s continued and growing position as an attractive destination for global companies’ European headquarters, while the market also offers strong supply-demand dynamics. We believe that these supportive underlying market dynamics will allow us to extend our already strong pipeline of Irish PRS opportunities and we look forward to working with the team at Kennedy Wilson to execute these.”

Since its arrival in the Irish market in 2011, Kennedy Wilson has steadily built up its Irish portfolio, and currently has a portfolio of some 2,100 residential units, as well as commercial interests including Stillorgan Shopping Centre. Last year the real-estate group said it wanted to increase its portfolio of properties available for letting in Ireland to about 5,000 in the next three to four years. Joining forces with another investor, as it has done with Axa, could give it the capacity to scale up to this level.

While Kennedy Wilson has previously said it would grow its portfolio mostly by building units, it could also be in the market to acquire properties as they come to the market. One potential target could be the Grange in Stillorgan, south Dublin. Last month 274 apartments at the development went on the market, along with a four-acre site and gate lodge, which are expected to accommodate an additional 263 apartments, for a guide price of some €135 million.