REITs and ‘cuckoos’ come home to roost: private equity takes over the Irish housing market

The ‘success’ of government policy in making Irish property an attractive asset for global investors, equity and wealth funds has resulted in a dramatic increase in investor flows into real estate in Ireland. The total assets in real estate funds in Ireland (about two thirds of which are held in property in Ireland) almost doubled from €6.9 billion in 2014 to €12 billion in 2015, and then increased by over 400% to reach €27 billion by the third quarter of 2018 (Central Bank, 2018).

The PricewaterhouseCoopers’ 2017 report on emerging trends in real estate in Europe noted that alongside ‘established multi-family markets in Germany, Denmark, Sweden and the Netherlands … an institutionally backed build-to-rent, or private rented sector (PRS), is beginning in Ireland’, with investment in the private rental sector in Dublin referred to as ‘a home run’ by investors (PwC and Urban Land Institute, 2017: 13).

Figure 8.1 shows that the non-household sector (comprising private real estate funds and financial investors, charitable housing organisations and state institutions) significantly increased its role in buying residential property in Ireland from 2013 onwards.

Table 8.1 shows that by 2017 the non-household sector had become ‘a significant actor in the Irish residential property market both in terms of purchases and sales’ (CSO, 2019b). In 2017 alone, the nonhousehold sector spent €2.1 billion on the purchase of 8,766 dwellings; this equated to 15% of the value of all residential purchases in Ireland in 2017. Apart from 2016, the volume of non-household purchases has increased every year since 2011, when just 760 non-household purchases were made. The number of purchases of dwellings by the non-household sector in 2017 was 11 times higher than in 2010. The value of non-household purchases has increased consistently from 2010, when the non-household sector spent just €171.9 million on dwellings. The number of sales from this sector also increased from 4,482 in 2010 to 16,031, and in value terms from €1 billion in 2010 to €4.3 billion in 2017.