Ireland can learn some lessons from the UK when it comes to tackling the housing crisis. While demand for housing has escalated to unprecedented levels in this country, our nearest neighbour has also been facing a serious shortage and stakeholders there are identifying new living products to cater for this undersupply.
"Ireland needs to employ new models of housing to the growing demand and to anticipate ever-changing demographics and living habits," says Louise McQuaid, senior associate property with law firm Pinsent Masons. "The alternative living sector is one such response to these challenges. Alternative living as an asset class includes student housing, co-living, private rented residential and retirement living."
"At Pinsent Masons, our alternative living experience spans the whole process from acquisition through development and construction to transferring and leasing," she adds. "We have acted, and act, on some of the most significant alternative living projects and are at the forefront of alternative living development in the UK and Europe in particular."
New asset class
She explains that a recent report carried out by PwC and the UK Urban Land Institute has demonstrated the attractiveness of this relatively new asset class. "In the Emerging Trends in Real Estate Europe 2020 report, respondents were asked to score various sectors' prospects in terms of both investment and development in 2020. The residential market dominated the investment rankings, taking six of the top 10 slots. The only asset class which ranked above alternative living solutions in both categories was logistics facilities."
Traditional commercial real estate investors in Ireland have tended to avoid the residential sector until relatively recently. “The overwhelming need for affordable rental accommodation, coupled with the lack of affordable residential property to buy, has made this sector more attractive as a long-term investment in Ireland,” McQuaid says.
Investors and developers have focused on purpose-built student accommodation and private rental sector schemes in the last number of years and these markets are now well established.
“Delivery of other types of alternative living in Ireland such as retirement living and co-living has not significantly progressed to date, however,” she continues. “But demographic and policy changes make the opportunity for delivering these alternative living products at scale all the more attractive.”
Co-living is among these products. “These developments comprise professionally managed rental accommodation where individual rooms are rented within an overall development with access to communal facilities,” she says. “The Sustainable Urban Housing guidelines issued by the Department of Housing, Planning and Local Government in 2018 referred to co-living as having ‘the potential to emerge as a distinct segment within the overall urban accommodation sector’. While the concept of co-living is sometimes divisive, developers seem keen to follow the trend of co-living in New York and London.”
Co-living scheme
The recent grant of planning permission by An Bord Pleanála for a 208-unit co-living scheme in Dún Laoghaire is evidence of this, she believes. "The growing demand for housing, the increasing affordability challenge faced by the younger generations and the apparent buy-in from government and planners, all point to co-living becoming a compelling prospect for developers and investors in Irish urban areas."
Retirement living products are becoming a significant market for investors in the UK. "Investors in Ireland have not yet embraced this product, but evidence suggests that this will be a noteworthy market in Ireland's future," McQuaid says. "Ireland's population has been getting steadily older since the 1980s. Census results published by the Central Statistics Office in 2016 showed that the number in the over-65 category increased by 19.1 per cent since 2011.
“In the UK, investors and developers are realising that the demand from individuals to downsize and live in rental housing, usually in a community-type setting, in later life offers strong development and investment opportunities.”
There is also a role for innovative living products. “These present an opportunity for all stakeholders in the market, from developers identifying the products to build, to local authorities planning for future growth to develop the best housing solution for Ireland’s future,” McQuaid says.