Home Property Dublin rents to rise 17% by 2021 due to lack of supply,...

Dublin rents to rise 17% by 2021 due to lack of supply, report finds

99
0

Large corporate investors purchased more than 11 per cent of housing sold in Ireland last year, with 2,923 residential units block-purchased, representing a five-fold increase on the previous year, according to research from property consultants Savills Ireland.

While housing supply in the State is on the rise, Savills warns that the residential market will remain undersupplied until at least 2023.

They also note that rental prices are expected to increase more than 17 per cent over in Dublin the next three years.

Savills reported that €1.1 billion was spent on multi-residential units in 2018, making up nearly 30 per cent of last year’s total property investment.

Some 81 per cent of these dwellings (2,273 units) were purchased in Dublin. It says this increase in investor activity is “helping to accelerate housing supply”.

Dr John McCartney, director of research for Savills, said rising house prices and tight mortgage lending had created a shift from owner-occupation to private renting.

“The number of households renting in Dublin rose by 10.8 per cent last year, and nearly 27 per cent of all households are now in the private rented sector,” said Dr McCartney.

“This has led to strong rents and negligible vacancy – factors which are obviously attractive to investors.” He added that the low supply of houses, which is expected to remain until at least 2021, should “ensure continued investor appetite for well-located residential investments”.

The report also references the rising number of residential investment transactions happening before the units are built, with most entering forward-purchase arrangements with developers to buy rental blocks once they are completed.

Fergus O’Farrell, director of investment at Savills, said this trend of forward-purchasing contracts reduces risk for a developer who might otherwise be unable to secure the funding needed.

Commenting on the nationality of those investing in Irish residential property, the report states that US buyers invested almost €660 million in Irish property in 2018, a 28 per cent increase on 2017.

long with a rise in European investments, it also highlights the arrival of Asian money, a phenomenon evident across Europe.

Earlier this year a conference on public housing warned the high cost of housing in Dublin was pushing increasing numbers of people towards “pauperisation” and forcing them to cut back on education and food.

Professor PJ Drudy from Trinity College warned that housing in Ireland was over-priced and criticised the development sector, saying builders were “drip feeding houses onto the market… to maintain high prices”.

The national average cost of monthly rent is €1,347, up more than 30 per cent on the cost of renting in Ireland in 2008, according to the latest Daft Irish rental price report.

Rents in Dublin have risen 37 per cent since the 2008 peak with prices in south county Dublin reaching €2,169, €2,029 in the city centre and €1,859 in the north city. Rents in Cork and Galway have also risen by 30 per cent and 47 per cent respectively while outside cities the average rent is 22 per cent higher than in 2008.

The report concludes that strong growth should continue to attract a “significant share” of global investment to Ireland with money already flowing in from the US, Germany, across Europe and more recently Asia.

Despite risks posed by Brexit and a slowing global economy, it said Ireland’s deepening integration with the global economy means demand for office space in Dublin will continue to grow.

LEAVE A REPLY

Please enter your comment!
Please enter your name here