Concern has been raised about the Irish construction industry’s over-reliance on foreign funding with new figures showing overseas investors accounted for nearly three-quarters of the €2.4 billion invested in the private rented sector (PRS) here last year.
The figures from estate agents Savills indicated just €630 million came from Irish sources. The influx of foreign funds, availing of strong returns from the rental sector, has been a feature of the sector here since the crash.
Property developer Rick Larkin said that while foreign capital is important, the industry's over-reliance on this source of funding leaves it exposed.
“Foreign capital is a good thing but it’s not enough on its own and it leaves us exposed in the event that it shuts off,” he said.
"If those guys – because of some other economic force – decide not to invest here, there will be capital flight," he said. This will stop investment and stop construction, Mr Larkin said.
Some of the investment here needs to be generated internally “if we’re to have stable industry, and not one that lurches from boom to bust all the time”, he said.
“We cannot allow ourselves to become wholly dependent on the whims of foreign capital. We can’t have every single apartment in the country owned by a foreign pension fund,” he said.
Mr Larkin and his family run the property development company Twinlite, which is behind a 372-unit development in Clongriffin, north Dublin. He is also the chief executive of property rental platform Vesta.
Most of the apartment schemes coming on stream in Dublin and elsewhere are being built and sold as a single lot to institutional investors from abroad for the rental market.
This has led to negative headlines about so-called cuckoo funds pushing out domestic buyers but the industry insists the schemes would not have been built without foreign capital.
A property report last week put the cost of delivering a two-bed apartment in Dublin at €463,000, 10 times the average full-time salary. As a result, most the schemes are built to rent.
Part of the reason why the industry has become so reliant on foreign investment is because domestic banks are so wary about lending to developers.
The treatment of foreign institutional funds could become a sticking point between Fianna Fáil and Fine Gael in upcoming government negotiations.
Fianna Fáil has pledged to clamp down on institutional investors buying entire schemes here by insisting developers devote a significant section of their homes to the sales market for individual buyers.