Ireland's Private Rental Sector Sees €244 Million Investment in Q1, Recovery Expected

Investment in Ireland’s private rental sector (PRS) is recovering, according to Ken MacDonald, head of Dublin estate agent Hooke & MacDonald. The sector saw €244 million in transactions in Q1, representing 55% of all asset class investments, indicating capital is targeting Ireland’s living sector. This follows a slowdown in 2022 due to increased borrowing and construction costs, and tough rent regulations.

To attract investors, the government last year loosened rent controls, changed apartment design standards, and cut the VAT rate on new-build apartments. MacDonald noted strong international investor interest at the MIPIM real-estate event in Cannes, driven by rental demand, supply shortages, population growth, a thriving economy, and clearer rental regulations.

While current investment focuses on existing apartment developments, optimism exists for new-builds due to government measures. However, MacDonald warned that rising building material costs, exacerbated by the Middle East conflict, may require further viability measures and tax incentives to meet housing targets.

The Department of Finance estimates building 300,000 new homes by 2030 will require €20.4 billion annually in development finance, with €17 billion from private sources. The Central Bank of Ireland projects new home completions to reach a post-Celtic Tiger record of 40,000 this year, rising to 43,000 in 2027 and 46,000 in 2028. Achieving the 300,000 target depends on new infrastructure for energy, water, and wastewater.