€1.5bn invested in Dublin private rented sector in first half of 2021

The private rented sector (PRS) market continues to see a high level of investment with around €1.5 billion spent across 19 major transactions in the first six months of this year. That’s according to the latest report into the sector by agent Hooke & MacDonald.

While the largest sale in the period saw Ardstone Capital commit to the forward purchase of around 900 properties either due to be developed or under development currently in multiple schemes in the greater Dublin area (GDA), several other deals involving hundreds of apartments in single locations were also completed.

The most valuable of these saw Sean Mulryan's Ballymore secure €200 million from the forward-funded sale to German-headquartered Union Investment of 435 apartments it is developing at 8th Lock, Royal Canal Park in Dublin 15.

Other significant deals included Cairn Homes' sale for €176.5 million of 342 apartments it is developing at its Griffith Wood scheme in Marino to Greystar, and Dwyer Nolan Developments' €181 million sale of 401 apartments across three north Dublin locations to Ardstone Capital.

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Another sizeable transaction was the forward sale of 295 apartments which are currently being developed by Michael Cotter's Park Developments at Clay Farm, Dublin 18, for €127 million to BlackRock/SW3 Capital.

The sheer strength of Dublin’s PRS sector over recent years was reflected once again in its share of the capital’s overall investment market. Hooke & MacDonald’s analysis shows that PRS accounted for 55 per cent of all investment in the first six months of 2021. The figure represents a notable increase on the 40 per cent recorded for the equivalent period in 2020. It also easily outstrips the combined 41 per cent of investment recorded by offices (25 per cent) and industrial (16 per cent) up until the end of June.

Growth in PRS investment

Since 2016, a total of 16,236 private rented sector units have changed hands in the Dublin market. An examination of these sales by Hooke & MacDonald shows that around 63 per cent of these (10,209) were new-build properties while the remaining 37 per cent (6,027) were existing older stock.

Commenting on this, the report’s authors say: “In a normally-functioning market where there is a shortage of accommodation it would be expected that new-build development and related transactional activity would far outstrip existing older stock sales. However, the increase in new build transactions in the first half of 2021 shows a more encouraging trend.”

Housing

Looking at the wider delivery of new houses and apartments, Hooke & MacDonald notes that just 2,495 units were completed in Dublin in the first half of 2021, due largely to the lockdown for private housing developments. Some 43 per cent (609) of these were in Dublin city, 24 per cent (336) were in Fingal, 20 per cent (290) were in Dún Laoghaire-Rathdown and 13 per cent (182) were in South Dublin.

Of the 2,495 new homes built in Dublin in the period, 57 per cent (1,417) were apartments, 39 per cent (982) were estate houses and 4 per cent (96) were single houses. The report’s authors say the overall figure represents just an eighth of the demand for new homes in the capital annually.

Outside of Dublin, 6,489 new homes completed in the first six months of 2021. Some 3,802 of these were estate houses, 2,034 were single one-off houses, while the remaining 653 units were apartments.

Commenting on these figures, Hooke & MacDonald says: “The shortage of apartment construction in Dublin and other Irish cities and towns, which are badly needed to allow for higher density urban and suburban living, continues to be of serious concern.”

Leaving the Dublin market aside, the report’s authors note that there were only 157 apartments built in Cork city in 2020 and only 52 built there in the first half of 2021; 34 built in Galway in 2020 and 40 in the first half of 2021, and 34 built in Limerick in 2020 and 33 completed in the first half of 2021.