The Government has promised a “radical” new approach to housing policy to ensure the Republic is meeting its target of 300,000 new homes in the next five years. To scale up to this level is going to require a multi-tenure approach and a startling figure of more than €12 billion annually in “private” capital funding.
With so many people living in rented homes in the State there is a real need for the Government to get this strategy right. What’s very concerning is the continued deterioration in supply in the rental market and tenant options, the lack of formal implementation of rent-regulation changes announced in June and the limited prospect of new rental supply being viable across the State.
Institutional investment in the private rental sector in the Greater Dublin Area in terms of the multifamily sector amounted to a high in 2019 of €2.45 billion comprising 5,948 rental homes, falling to €1.18 billion in 2020 across 2,969 homes. The then government’s November 2021 rent-regulations change to a maximum of 2 per cent rent increases per annum, combined with wider market challenges regarding increased construction costs, interest rates and yields, has seen the slide dramatically continue, with less than €330 million invested to date in 2025. Most of this investment was in stabilised portfolios rather than newly built stock.
The two largest multifamily transactions in 2025 were the Ardstone acquisitions of the Ronan Group-developed Spencer Place in Dublin’s north docklands, comprising 360 apartments for €177 million at a net yield of 4.9 per cent; and 180 apartments for €79 million at Birchwood Court, in Santry, north Dublin, equating to a net yield of 5.15 per cent.
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Despite the Government making changes to allow for rents to be re-set to market levels once tenants have vacated, the 4.5 per cent reduction in VAT to 9 per cent and the proposed apartment design changes, owing to a range of factors, especially the heightened yield levels, apartment development is largely unviable across Ireland.
[ Rental crisis to intensify as ‘starved of supply’ housing stock dips below 2,000Opens in new window ]
There is a need to change the wording in the proposed rental regulations for new developments from “planning lodged” on June 19th, 2025 to developments “not yet commenced” at that date. Rent increases should be linked to wage inflation, not the consumer-price index.
Prime yields for multifamily in Dublin are estimated at 4.85 per cent. This is higher than comparable cities across the EU, which allows a very positive narrative around stabilised investments, some of which have considerable reversionary opportunities.
The attractiveness of the “living sector” globally is also being seen in the Irish private rental sector (PRS) market as multiple existing and new investors review opportunities. We have seen new capital in the form of Commerz Real and Catella enter the student housing sector (PBSA), which is very positive, and others, including German-based funds in the multifamily sector.
The yield profile across all asset classes has changed post-Covid as the more intensive operational nature of real estate has become apparent and higher returns are being expected. Capital allocators are positively underwriting the Irish residential investment market, as can be seen from the healthy number of term sheets being issued and competitive terms secured where stakeholders have been refinancing their Dublin portfolios over the last 12 months. This has given breathing space to many stakeholders who are not long-term holders, who can assess market conditions and act on their own timescales.
What we will see in 2026 is a number of large, high-quality Dublin multifamily stabilised portfolios transacting with investment volumes of more than €700 million. This will be positive for those looking to exit and bring in new capital to Ireland, but unfortunately it won’t bring one more home into the rental sector. The Government can’t just sit back and say it has done everything it can – it hasn’t. We are in a national emergency in relation to housing; the Government needs to act now and do more to create the conditions for viable new supply.
We are now heading for a self-inflicted catastrophe in the private rental market due to the flawed regulatory policy and with a set of measures that were cobbled together and designed to help tenants but which do the opposite by excluding the funders who can provide supply and help keep rents under control. There is still time to arrest the decline but it requires vision and courage.
Ken MacDonald is managing director at Hooke & MacDonald
