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Banking giant Allied Irish Banks has launched a €500M development fund with Activate Capital, aiming to deliver as many as 1,000 new homes a year.
The Irish Apartment Development Fund, which is already evaluating several projects, is set to focus on the cities of Dublin, Cork, Galway and Limerick, providing debt capital to finance the development of apartments and student accommodation.
The IADF will be managed by Activate Capital, which is backed by global asset manager KKR, and will promote mixed-tenure developments, including in the owner-occupied market, private rental sector, cost rental and social housing markets.
AIB had previously allocated €800M in funding to support social housing development by the end of 2024, and the bank said in announcing the scheme that for developers, securing funding had become a key obstacle to new home construction in Ireland.
“The purpose of IADF is to increase the availability and flexibility of funding options for the developers of apartment and student accommodation, and in this context, we are delighted to work with Activate Capital to help accelerate housing delivery,” AIB Capital Markets CEO Cathy Bryce told the Irish Independent.
“We are confident that IADF can be an important contributor to future apartment development finance needs, and at full deployment, IADF can deliver around 1,000 homes per annum. IADF is already up and running and we are inviting submissions from developers for the fund immediately.”
Activate Capital CEO Robert Gallagher said KKR was committing capital to Ireland through the fund and was looking forward to deploying the capital “at pace in 2024.”
The company added that the fund’s objectives “align closely” with the Housing for All government strategy and “importantly brings together additional domestic and international capital for new home delivery.”
Activate was founded in 2015 and has a long-term partnership with the Ireland Strategic Investment Fund. It has become one of the state’s leading providers of real estate development finance and has advanced loans of €1.9B across 75 sites that have the capacity to deliver more than 18,250 homes.
Overall, 32,695 new dwelling completions were recorded in Ireland in 2023, up 55% compared to 2019, with new home completions expected to rise to 35,000 this year and increase further in 2025 and 2026.
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