The residential investment market outlook is now available.
The sale of multi-family assets made up 83% of total spend in the sector in 2021, while social housing represented 9% and student accommodation was 6%. Single family investment units made up only 2% of total spend. 50% of transactions were completed by new investors to the Irish market.
Residential investment demand is being supported by population growth and the pace of employment growth in key sectors, such as TMT and industry (including pharmaceuticals) which have seen a considerable increase in high value adding jobs since the beginning of the pandemic.
The ongoing structural problem in the housing market, where supply has failed to keep in line with demand for over a decade, has come even more to the fore over the last eighteen months. Combined these factors are set to continue to make residential investment assets competitively sought after by domestic, European and international capital.
Activity in the residential investment sector in Ireland mirror wider market activity across Europe where investment in residential assets in second only to office investment.
Income producing assets are the most sought after in the European market*, followed by forward funding and forward commit. The largest barrier to investment is the availability of operational stock, which is also the case in the Irish market.
The first forward funding deal completed in 2021 between Union and Ballymore with the shortage of supply of operational stock in the Irish market expected to drive an increased number of forward commit deals and also more forward funding deals in 2022.
Joan Henry, Chief Economist & Head of Research, Knight Frank Ireland