Driving big investors like Allianz away from housing is a lose-lose situation

Institutional capital has a role to play in solving the housing crisis, even if not everybody agrees

 

The decision by Allianz to abandon plans to invest in Irish residential property, lest it be publicly disparaged as a so-called “vulture fund”, should have the warning lights flashing on the dashboard of Irish housing policymakers.

The near-hysterical national debate over the involvement of institutional capital in the housing market is now beginning to affect corporate decision making. That could spell trouble for efforts to bring about an end to the housing crisis.

As revealed in The Irish Times, Allianz Real Estate was contemplating investing in several Irish housing projects, but it was dissuaded from doing so by the local insurance arm. It feared the Allianz brand being tarnished in this market in the heated debate on housing.

We do not know how seriously Allianz was looking at investing, or how much it planned to spend. Nor do we know if it was going to fund new development, or simply acquire units that are already built. Whatever it was, however, that potential investment in Irish housing is now lost.

It is easy to see why Allianz baulked at the current state of public debate. The housing crisis is now so relentlessly politicised that most discussion on the issue is conducted within a framework of stifling ideology.

Those who are most prominent in the public debate, the Government’s political opponents, have succeeded in casting all institutional capital in housing as, somehow, the enemy.

There is little evidence that, as alleged, institutional capital in the build-for-rent sector is exacerbating the housing crisis. There are plenty of reasons to suggest it could play an important role in funding the development of a type of accommodation – one and two-bed apartments in urban locations – that are badly needed.

If a global behemoth such as Allianz can be scared away from the market, so, too, can other institutions who may see the juicy returns on offer as scant reward for the battering their brands may receive. If institutional investment is driven away, the State will eventually have to stump up to fill the gap.

This may be precisely what the anti-corporate side of the housing debate wants, but it is also short sighted.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.