Build-to-rent may still be a relatively new concept in Ireland, but it is attracting big interest from national and international investors.
“We’re seeing a migration of capital into residential markets, as it did in the U.S. in the early 1990s,” CBRE Director Tim MacMahon said. “And this is here to stay.”
MacMahon said interest is coming predominantly from core European funds and insurance companies, North American funds — mainly Canadian — and Irish REITs and pension funds.
Figures just released by Cushman & Wakefield indicate that investment in the private rented sector, including forward funding deals, amounted to €508.7M in the first six months of the year in 11 deals. The overall investment turnover for H1 was €1.6B, according to the company.
So, who exactly is doing the spending?
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Kennedy Wilson
One of the most active and ambitious players in this space, Kennedy Wilson recently formed a joint venture with Axa Investment Managers to target private rented sector development and investment opportunities in Dublin and other large urban centres in Ireland. That partnership has since spent €161M on 274 units at the Grange in Sandyford, as well as an adjacent 4-acre PRS development site.
Kennedy Wilson is also rumoured to be the frontrunner for the purchase of City Block 3 in the Dublin Docklands, a 6-acre site behind the new Central Bank headquarters that has full planning permission for 347 residential units.
At the moment, the company has 2,700 units owned, under construction or contract: 217 of them are in Cork, with the rest in Dublin. It is in the process of developing around 800 of these units.
“The growth of our build-to-rent portfolio is a significant priority for us,” a company spokesperson said. “We have stated that our ambition is to more than double our portfolio both through acquisition and BTR.”
IRES
Irish Residential Properties REIT continues to be very active in the private rented sector space. In May, it completed the purchase of 128 apartments at Hampton Wood in Finglas from Dwyer Nolan for €40M. The company now owns 2,579 apartments across 21 schemes in the greater Dublin area.
Tristan Capital and SW3
Tristan Capital and operating partner SW3 Capital have bought 185 apartments in Elmfield in Leopardstown from Dwyer Nolan Developments in two phases over the last nine months for €68.5M. Tristan and SW3 also own the 197-unit Neptune Building in Honeypark, which it forward funded for Cosgrave Developments at a cost of €72.5M.
Patrizia
German investment manager Patrizia paid €132M last year for two other blocks in Cosgrave’s Honeypark scheme: the Charlotte Building and the Leona Building. The two blocks comprise 319 apartments and are scheduled for full completion by November of this year.
“This investment follows our strategy to increase our footprint in the build-to-rent sector, particularly in European cities such as Dublin with strong fundamentals as well as its growing appetite for high-quality rental properties and record low vacancy rates,” Patrizia’s U.K. and Ireland Managing Director James Muir said when the acquisition was announced last September.
Hines and APG
A major build-to-rent operator in the U.S., Hines recently got the go-ahead to build 1,269 apartments at its Cherrywood Town Centre development. These will be built through a joint venture with Dutch pension investor APG Asset Management. Hines has said it aims to achieve greater exposure to the private rental market here in the long term.
Glenveagh Living
Glenveagh Properties set up Glenveagh Living to design, develop and deliver residential options for institutional investors and state entities. At its AGM in June, the company said it has invested around €124M to date on a pipeline of over 1,850 PRS apartments. It also said it was considering selling its 90-unit Herbert Hill development in Dundrum to an institutional investor on the back of reverse enquiries.
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Carysfort Capital
At the end of June, Irish real estate investment manager Carysfort Capital agreed to buy Six Hanover Quay, a 120-unit scheme being built by Cairn Homes and due for completion early next year. The purchase price, including VAT, was €101M.
Lone Star and Quintain
In April of this year, Lone Star appointed its London-based developer Quintain to manage its Adamstown Town Centre scheme, which will include 1,000 high-density apartments. Quintain is now looking at the options for the scheme. The company said its residential brand Tipi, creating its 7,000-unit scheme in Wembley, London, has a natural synergy with the Adamstown development.
ILIM
Irish Life Investment Managers returned to the residential market in recent months with the acquisition of 262 apartments at Fernbank in Churchtown for a reported €138.5M. The scheme is currently being built by Park Developments and had originally been earmarked as build to sell.
ILIM is understood to have around €1B to spend on residential investments.
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The opportunities going forward
With so many parties looking at the market, new opportunities are expected to generate a lot of interest. Planning permission has just been granted for a development of 459 apartments — with communal on-site amenities — across six blocks at Carmanhall Road in Sandyford.
Clare Holohan, director of real estate at Duff & Phelps, the development manager on the planning application, said the scheme's design recognises its potential suitability for PRS operators.
How the development process will proceed has yet to be decided.
“The receiver and NAMA will now start looking at options for delivery,” Holohan said. “There are lots of options but it will most likely be a competitive market process.”
Marlet Property Group recently ended negotiations with Round Hill Capital for the forward funding of its Dublin Living portfolio of 1,205 build-to-rent apartments at four sites across Dublin. It is understood the proposed deal was worth €450M. Marlet Chief Executive Patrick Crean said the company will now look at other options for the sites.
According to the Irish Independent, at least nine parties have approached Marlet to express an interest in buying the site since the Round Hill Capital talks ended.
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