Build to rent popular among young

Consultant firm Linesight said within the 29% of Irish people now renting, two-thirds of that group were aged 25 and 44, one of the highest rates in the EU.

Pádraig Hoare

There is a compelling need for more investment in the build-to-rent housing model with vastly increasing numbers of young people preferring to rent rather than owning homes outright, a new report has said.

Consultant firm Linesight said there are clear demographic drivers to the build-to-rent market with 29.5% of Ireland’s population aged between 25-44, one of the highest proportions in the EU, the target age cohort for the model.

With apartment living rising by almost 89% since 2002 in Dublin to become the fastest growing type of housing nationally, and housing stock remaining way below required levels, the build-to-rent “can go some way to alleviate this supply-demand imbalance”, Linesight said.

The concept of build-to-rent development is one that is firmly established in many jurisdictions such as the US, where it is now regarded as a mainstream sector, offering superior returns to other more traditional forms of investment

“Build-to-rent has also gained popularity in Europe and in the UK in recent years, but is as yet only at an embryonic stage in the Irish market,” the report said.

The 25 to 44 age cohort lends itself well to the model, including would-be first-time buyers seeking security of tenure, but who cannot access mortgages, and young professionals who are attracted to increased amenity and residential servicing, Linesight said.

Increased security of income for investors is conducive to the release of funds to support developers, who can create savings in build and land costs, according to the report.

It is a relatively new asset class in Ireland attracting major interest from national and international developers and investment funds, due to its relatively stable yields and sustainable revenue model, it said.

However, challenges include land supply and related costs, local and centralised planning authority alignment, and infrastructural and industry resource issues, Linesight said.

The firm’s managing director Richard Joyce said: “Our research indicates that there is a fundamental desire to build this asset class in Ireland at scale, with pension and insurance funds constituting the largest national and international investors in the sector.

“Build-to-rent is seen to be a relatively stable and sustainable investment area, and while rents will adjust as supply increases in the coming years, there will simply be additional emphasis on factors that are already key areas of focus, such as product quality, location and amenities.”