Ireland Needs More PRS, But Delivering Quality Is Down To Purpose-Built BTR
Dublin’s need for homes has never been greater.
House prices have reached record high levels and the number of available homes to rent has plummeted. However, satisfying the needs of Ireland’s renters will take more than just building new blocks where there is space.
“Today’s renters want high-quality homes in desirable locations,” PRS developer and operator Grayling Properties Managing Director Peter Horgan said. “To deliver this requires a combination of refurbishment and new builds providing homes in city centres that meet the expected standard of modern tenants. As the tech sector continues to grow, the race is on for the PRS sector to catch up with demand for accommodation.”
Ireland’s PRS sector first emerged in 2014, Horgan said, driven by professional institutional landlords.
“Many institutional investors started buying blocks from Nama and refurbishing them to the standard modern tenants expect,” Horgan said. “But these weren’t purpose-built apartments for rent. It’s only in the last few years that BTR has taken off, creating momentum in the supply of rental accommodation.”
Recognising the record demand for apartments, investors are keen to get in on the action. In the first three quarters of 2021, total investment in PRS in Ireland came to €1.5B, Cushman & Wakefield said. This is up from €638.8M in the same nine months the previous year. Grayling Properties has grown with the sector and now manages 1,200 units across Dublin.
The sector's growth is not yet meeting levels of demand, however. The current availability of homes is at its lowest point since the property advertisement website Daft started tracking availability in 2006.
"Many private landlords that were previously the bedrock of the rental market have exited, either forced out by the global financial crisis or the increased regulation," Horgan said. "This has placed significant pressures on the supply side of rental units."
As supply has fallen, two factors have been driving demand for rental accommodation, Horgan said. The first is financial. The average house price in Dublin topped €500K in 2021 after a 14.4% surge in prices. It is also harder to get a mortgage following the financial crash.
“Pre-financial crisis, it was easy to get a mortgage, even a 100% mortgage,” he said. “Now it is much more restrictive. The sharp move from homeownership to mixed tenure happened abruptly and the property sector hasn’t yet caught up.”
Ireland is quickly becoming a nation of renters, not only because affording a mortgage is more challenging but because people are choosing not to buy, Horgan said. Attitudes to renting are changing as young people don't want to be tied into a long commitment, instead of enjoying the lifestyle of PRS. Dublin’s increasingly young professional demographic is only going to exacerbate the shortage of units. Ireland has the youngest population in Europe, which is a big driver of rental demand, Horgan said, and is reinforced by the strong jobs market.
“The second big driver of PRS in Dublin is the city's internationalisation, driven by the tech sector,” Horgan said. “Tech companies hire people from all over the world, drawing young professionals to the city who want to work in exciting companies in a buzzing location. When they land they are renters.”
Horgan cited the number of large tech companies putting down roots even more firmly in Ireland. Google continues to expand its footprint in Ireland and has announced it is building a new campus in the centre of Dublin. Facebook has its European headquarters at Ballsbridge in Dublin and the Salesforce Tower Dublin is under construction. In the wake of these enormous tech companies, Horgan said, Ireland’s wider tech sector is booming.
Creating The Right PRS
To satiate Dubliners’ need for PRS, both refurbishments and new buildings are required, Horgan said. Grayling Properties’ portfolio is a combination of refurbished space, some repurposed office space and new-build properties. The firm currently has 972 units in the new-build construction pipeline such as at Cork Street in Dublin, as well as 250 units under refurbishment. Aside from one site in Blackrock, County Dublin, and another in Northern Cross, all sites are in central Dublin.
“Brownfield development and refurbishments are important to be able to provide units close to employment,” Horgan said. “Young professionals want to be near nightlife, to be in the city centre. Previously industrial areas of Dublin have been rejuvenated in the last few years and a lot of residential has appeared.”
Grayling Properties’ aim is to provide quality apartments in excellent locations. The desire from young professionals is for high-quality homes that are professionally managed, which is only going to increase, Horgan said. Employment is already at record levels and Dublin is capturing the attention of young professionals looking to work in the dynamic tech sector. The United Nations has named Dublin one of the fastest-growing cities in Europe.
Horgan said he has no doubt that Ireland’s PRS sector will continue to grow at pace. While Ireland continues to grow its young demographic, the property sector faces a real challenge to catch up with demand.
This article was produced in collaboration between Grayling Properties and Studio B. Bisnow news staff was not involved in the production of this content.
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