‘Dublin rent to keep rising’

One of the country’s largest residential landlords is tapping strong demand for rental properties thanks to the chronic shortage of housing across the capital and the cost of building new homes.

Construction costs have been flagged time and again as the biggest obstacle to building homes in Dublin. Surging demand has seen property prices in the capital 11% higher than this time last year.

Irish Residential Properties REIT (IRES) is one of the firms benefiting from the shortages, however, as demand for rental property helped the firm build pre-tax profits of €14.8m — up from €5.8m last year.

The property investment company, which owns a large number of properties across Dublin yesterday, released interim figure that showed occupancy levels of close to 100% was driving its earnings growth in the first half of the year.

Strong rental growth of between 10% and 15% also added to a positive first six months of the year.

“Our very high-quality portfolio continues to perform extremely well, with 10% to 15% rental growth on renewals and turnover, virtual full occupancy, and net operating margins over 80%,” said chief executive David Ehrlich. “For multi-residential real estate, given the long-term stability of rents, the fundamentals could hardly be stronger.

“Given current planning guidelines and the expense of new construction, the cost of building makes it difficult for the severe shortage of accommodation to be rectified over the next several years at least.”

As well as ensuring strong demand for its rental property, IRES also plans to develop up to 650 apartments in the near future, having already absorbed the cost of much of the preparatory work, including the construction of multi-storey garages to facilitate development.

Record low interest rates are continuing to facilitate the expansion of its portfolio with up to €300m of acquisitions in IRES’s eyeline.

As of the end of June, the company’s net assets had more than doubled since the end of last year to €419.5m.

In March, IRES raised gross proceeds of €215m through the issuance of 215,000 shares at €1 per share, the proceeds of which were ploughed into further asset purchases.

The capital raise also allowed IRES to repay €70m of bridge facility lending and €43m of borrowings drawn down under the revolving facility.