Investment funds are becoming bigger property players in Dublin suburbs

Major investment funds have acquired several thousand apartments, duplexes and family homes in Dublin’s suburbs and commuter belts over the past two years, signalling the beginning of a move away from the city centre core and the Docklands.

In addition to Round Hill Capital, which was involved in the recent acquisition of over 250 family houses in Maynooth, Co Kildare, and Hollystown, Dublin 15, at least four other major investment funds have been involved in significant purchases of new home developments in suburban areas.

The State’s biggest house builder, Cairn Homes, has sold significant tranches of housing developments in Citywest and in Maynooth to the investment company Urbeo, which is backed by the Starwood Capital Group.

It sold 282 apartments in Citywest to Urbeo, as well as 129 family homes, comprising a mix of houses and apartments.

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In Maynooth, Urbeo acquired 150 units in November 2019 from Cairn and, more recently, 40 houses, 12 apartments and 12 two-story duplexes at the same location.

All the units are to be put on the private rental market, with highest rents for houses in Citywest set at €2,425 per month.

Cairn Homes also sold 229 apartments in Lucan, Co Dublin , to Carysfort Capital and the American investment fund Angelo Gordon.

Another international investment company, Greystar, put in a bid of €180 million for 377 apartments and eight houses on Griffith Avenue in north Dublin. DWS, a subsidiary of a German bank, bought a portfolio of 317 homes, comprising of houses and apartments in four schemes in Swords, Raheny, Clontarf and Killester.

Another international fund, Patrizia, acquired 166 apartments at a development in Mount Argus in Harold’s Cross, Dublin 12.

It comes as the Department of Housing and the Department of Finance have told Government TDs that they will move very quickly to address the issue of investments funds buying tranches of suburban housing.

Tax arrangements

At a briefing of Fianna Fáil TDs and Senators on Friday morning, Minister for Housing Darragh O’Brien indicated that there will be changes to both tax arrangements and planning laws.

“We have been told the Department will move in quickly to limit the use of these funds either geographically, or by density, or by ownership, even though the last one might be more problematic,” said Fianna Fáil TD Paul McAuliffe, a member of the Oireachtas Housing Committee.

Senator Mary Fitzpatrick, also a member of the committee, said the quickest means of doing it would be for Minister for Finance Paschal Donohoe to change the tax arrangements for investment funds who wish to purchase houses.

Several Fianna Fáil TDs expressed concern that any changes in planning law would take some time to implement.

Conall MacCoille, chief economist with Davy stockbrokers, said it was difficult to do cross-country comparisons but the proportion of rental stock held by institutions in Ireland was small in comparison with the US, where it was 20 per cent, and in Europe, where it was close to 50 per cent.

He said that some investment companies had acquired houses in suburban developments. “Is this the start of a trend where they buy houses… or a once-off? The scale of house purchases is tiny compared to apartments.”

He said that 20,000 homes had been completed last year, of which these houses comprised a few hundred.

Mr MacCoille said that in the wake of the crash, apartment blocks in Ireland would not have been built without institutional finance. He said they had provided equity capital and de-risked projects at a time when getting finances was difficult.

He said there is also a need for a healthy rental sector that is efficient and professional.