Dublin’s fast-growing private rented sector (PRS) continues to dominate the Irish property investment market, according to a new report from agent Hooke & MacDonald.
For the second successive quarter, some 55 per cent of all investment transactions in the capital involved the purchase by institutional investors of both newly-built and existing apartment developments. To put that share of the market in perspective, Dublin’s still-booming office sector accounted for 37 per cent of investment activity in the same period.
Hooke & MacDonald’s report shows there were 12 main private rented sector transactions with a combined value of €602 million contracted in Dublin in the third quarter of 2019, six of which were new build and six of which were existing stock. The new build comprised 935 units while the existing stock comprised 453 units.
The new build PRS transactions comprised of the completion of Ballymore and Oxley's sale for €175.5 million of 268 apartments at Dublin Landings in the city's north docklands to Greystar. Cairn Homes sold The Quarter at Citywest, in Dublin 24 to Urbeo for €94 million, while German fund Patrizia acquired a portfolio of 166 apartments being developed by Pat Crean's Marlet Property Group at Mount Argus, Harold Cross, Dublin 6W. Patrizia also acquired the Benson Building in Dublin's Grand Canal Dock, paying € 52.5 million. Hampton Wood (Phase II), Finglas, Dublin 11, comprising of 92 new-build properties was purchased by an Approved Housing Body (AHB) from Dwyer Nolan for € 35 million.
Gross yields
Based on the six most recent new-build PRS apartment transactions in Dublin, gross yields averaged 5.34 per cent while net yields averaged 4.03 per cent.
Private rented sector sales constituted 44 per cent of all property investment sales in Dublin in the first nine months of 2019, followed by 34 per cent for offices and 12 per cent for mixed-use. There were 25 private rented sector transactions contracted in Dublin in the first nine months of 2019, 10 of which were new build and 15 of existing stock. The new build comprised of 1,359 units and the existing stock comprised of 1,998 units. The total sales value was €1.345 billion.
There are 16 residential investment transactions at sale-agreed stage in Dublin, five of which are new build developments, comprising 930 units and 11 are existing stock comprising 278 units. The total sales value is €514 million.
Six residential investment propositions were launched in the capital in the third quarter of 2019, one of which is new build, comprising 1,695 units and five of which are existing stock comprising 548 units. This brings to 4,181 the number of units launched in the first nine months of the year. There is a mixture of off-market and public launch offerings.
Commenting on the figures, Ken MacDonald of Hooke & MacDonald said: “The first nine months of the year has seen a significant increase in PRS opportunities at various stages of planning and construction being offered in the Dublin market as stakeholders seek to benefit from the strong demand and the build-to-rent strategy on schemes that would currently not be viable under the build-to sell market.”
Shortage
Notwithstanding this increase in activity, Hooke & MacDonald’s report suggests there is still a shortage of new apartments under construction.
Just 570 of the 1,546 new residential units completed in Dublin in the second quarter of this year were apartments. Some 899 estate houses and 77 single one-off houses were finished in the same period.
The 570 apartment completions represent less than one-fifth of what the report's authors estimate as the actual requirement per quarter. Of the 570 apartments completed in Dublin in the second quarter of 2019, 57 per cent (326) of them are located in the Dublin City Council area, 22 per cent (124) in the Dun Laoghaire Rathdown County Council area, 14 per cent (79) in the Fingal County Council area and seven per cent (41) in the South Dublin County Council area.
