Irish property executives and economists have reported a shift in international investor interest in supporting the funding of housing projects at the “Davos for real estate” in Cannes this week, following a series of Government reforms.
Minister for Housing James Browne led a delegation from the Irish property sector to the Marché International des Professionnels de l’Immobilier (MIPIM) conference this week, where he made a pitch to investors as international capital is needed to help meet the Government’s goal of delivering 300,000 new homes between 2025 and 2030.
“The domestic political discourse around courting international capital for the property industry has at times been pretty hostile in Ireland over recent years. That is why the Minister’s visit and his comments to a large cohort of institutional investors over recent days marks somewhat of a turning point in our view,” said Dermot O’Leary, chief economist with Goodbody Stockbrokers.
“One visit to a property conference is not going to change the dial on its own, but it does drive home the message that it is willing to compete for the finite international capital that is available to complement the record amount of state funding that is currently being made available to the sector.”
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Following years of missed house completion targets, the Government has moved in the past year to instruct local authorities to make more zoned land available, tweak rent controls, ease apartment development guidelines, reduce VAT on apartment building, and publish an action plan to accelerate the delivery of infrastructure in efforts to boost output.
A total of €140 billion in public and private funding will be needed to reach the Government’s housing delivery target of 300,000 homes by 2030, Property Industry Ireland, a trade association within Ibec, said in a report last year.
“It estimated that additional investment capital of €24 billion will also be required,” said O’Leary. “The Government recognised a market failure when it moved swiftly in 2021/2022 to replace the private capital that had dissipated when interest rates rose sharply and viability was challenged. Recent geopolitical turbulence aside, the fall in interest rates, along with the policy changes opens up the likelihood that private capital into the private rented sector can resume.”
The Land Development Agency and approved housing bodies stepped in to address a gap in the market for apartment building following an exodus of private investors between 2021 and 2022.
“Investors are keenly aware of the significance of various policy changes which have been introduced in the past 18 months,” said Michael Stanley, chief executive of Cairn Homes, in a statement issued on Thursday by the organisers of the Irish pavilion at Mipim. “It is changing their sentiment towards investment opportunities in Ireland.”
Stephen Garvey, chief executive of Glenveagh Properties, said investors he spoke to at the event “have said that Ireland is now a more competitive investment location for property projects than other countries in Europe”.
“International capital is critical for delivering housing at scale as it fills the gap left by limited public funding,” said Michael Hynes, chief executive of Evara, formerly known as Quintain Ireland. “The international investors we have engaged with here at Mipim are very positive that Ireland is again investible.”
O’Leary concluded: “We will be looking for transactional evidence that with these uncertainties reduced that investors are willing to put their capital to use in Ireland. There has been some tentative evidence recently that this is happening. The signals sent out to investors in the past few days should augment that trend.”
