DUBLIN RENTAL MARKET
Outlook for 2022 and beyond
Last year investors continued to focus their attention on opportunities in the Dublin rental market: there were several new entrants to the Irish multifamily market, attracted by economic and demographic factors as well as the scarcity of affordable housing and the resilience of the sector throughout the pandemic.
"For the real estate sector to have performed as well as it did in 2021 is remarkable"
CBRE, 2022
High Yields
In the near term, the bounce back from COVID-19 will boost the market, while the high yields associated with multifamily homes will continue to provide the best returns.
Rental Demand
Moving further into 2022, we expect the market to grow as demand continues to increase. A growing population and influx of those seeking rental accommodation in the capital are expected to continue to put pressure on the rental market.
Scarce Supply
Beyond 2022 we see that the scarcity of affordable housing will continue: plans for new builds paired with the renovation of existing properties will maximise supply but will still fail to meet the growing demand for rental accommodation.
DUBLIN RENTAL MARKET
Factors influencing the Dublin rental market
We know that RentFlow clients are interested in the Dublin rental market and considering whether to invest in Irish real estate in 2022. Several factors are contributing to the growing importance of the private rented sector (PRS) in Ireland and the difficulties associated with being a small landlord.
Here we discuss these factors and the potential performance of the Dublin rental market in 2022.
DUBLIN RENTAL MARKET
Demand driven by strong continuous population growth
Ireland’s current population of over 4.9 million increased by 0.91% between 2020 and 2021 and is projected to reach 5.7 million by 2050. As Irish population growth remains robust, and with Dublin accounting for more than 25% of the country's total population, the number of people living in the capital is continuing to increase.
Dublin’s population growth is being driven by a combination of positive net migration and natural increase. This growth is set to create demographic changes- with much inward migration driven by multinational companies active in the tech and finance sectors. This inward migration is pushing up demand in within the M50 commuter belt, favoured by those wishing to live in studio apartments close to the centre of the city.
As a result, RentFlow has prospered in the multi family home sector. We respond to shifts in housing demand by renovating city centre properties and providing sustainable rental accommodation.
DUBLIN RENTAL MARKET
Supply imbalance and a severe shortage of affordable housing
The increase in demand has resulted in a significant supply and demand imbalance across all tenure of housing stock. Dublin rental stock at the beginning of 2022 was down 73% compared with the same date a year earlier, reaching the lowest stock figures in a series that starts in 2006.
At RentFlow we know that the renovation of existing properties in the city centre is vital in responding to this supply shortfall and reaching the government’s ‘Housing for All - a New Housing Plan for Ireland’ goal of an average of 33,000 new homes to be provided each year from 2021 to 2030. The severe shortage of affordable housing of all types and tenures combined with economic and demographic factors have meant that assets in the Dublin rental market are continuing to perform strongly.
“Figures show that it is certainly not a question of whether Ireland’s new rental homes will be occupied, but rather how fast.” (Daft.ie Rental Price Report)
DUBLIN RENTAL MARKET
Average rent compared with sustainable RentFlow rents
Dublin rents are on the rise. Having been largely stable before the pandemic, rents are now rising sharply as supply is at all-time low. The graph on the left shows the average rental prices for Dublin city centre and surrounding areas, along with the most recent year-on-year percentage change.
While prices remain stubbornly high, at RentFlow we know that by positioning our rental prices below this market value we provide a secure return for our investors. Our sustainable average rents of €1250 per month per apartment ensure that we will continue to provide our fixed returns even if the market fluctuates and the average rental price goes down.
DUBLIN RENTAL MARKET
Yields on multifamily assets
Prime yields on multifamily assets remain attractive as Irish market fundamentals continue to be supportive of long-term growth and strong in comparison with European markets. The rise of the private rental (PRS) sector continued in 2021, accounting for 39% of volumes and outperforming the rest of the market.
But the numbers don’t add up for small landlords, who are leaving the sector because of high tax and ever-changing regulations. The difficulty is that to be able to tackle this market and service tenants appropriately, landlords need to be able to scale their property portfolio, building a foundation for growth.
This is why RentFlow is a great option. We structure rental property ownership in a way that makes a lot more financial sense.
DUBLIN RENTAL MARKET
Driving Demand
Growing tech and finance sector
The IFSC and docklands have expanded as large international companies continue to choose to locate their offices and headquarters in Dublin. Employees are driven to the capital and are seeking accommodation as singles or couples, driving the appetite for affordable accommodation within the M50 commuter belt, within close proximity to their place of work and local amenities. RentFlow has responded to this demographic shift by renovating one-bedroom and studio apartments in Dublin 7 and surrounding areas. Well connected by bus and the Luas, these apartments are highly sought after by those working in the city centre, the IFSC, as well as healthcare workers in the nearby Mater hospital.
International European city
Dublin is an attractive capital which stands out in Europe as Ireland is now one of only two EU countries where English is an official language. A vibrant and welcoming city, Dublin is attracting students and workers who immerse themselves in the culture in order to learn English, many of whom are now returning for courses which were halted during the COVID-19 pandemic. This inward migration will also create demographic changes- young people who require accommodation within easy reach of the city centre.
Resilience through COVID-19
As the rental sector performed with resilience throughout the pandemic investors have realigned their strategies and returned to the market with optimism, and investment in the Dublin rental market has stabilised as economic conditions have breached pre-pandemic levels. Optimism is coupled with caution as small landlords struggle with high tax rates and ever-changing regulations and now strive to diversify their portfolios.
DUBLIN RENTAL MARKET
Increased importance of ESG factors
An overarching influence on the Dublin rental market is the growing need for incorporating Environmental, Social, and Governance (ESG) aspects into the investment process. ESG is increasingly becoming the lens through which investment and redevelopment decisions are being made, important for tenants and owners alike.
“The most sustainable building is the one that already exists. RentFlow’s BRRRR approach allows us to provide affordable accommodation while also combatting dereliction, long-term vacancy, and the impact of new builds on the climate.”
Spire Capital 2022 | Asset Management Division
“The extent to which sustainability and EU taxonomy moved up the agenda of occupiers, investors, developers and lenders during 2021 was particularly remarkable.”
CBRE Market Outlook 2022 | Ireland Real Estate Report
“Nearly 75% of investors are integrating environmental factors into their strategies to future-proof their assets and address climate change questions from stakeholders.”
Colliers 2022 Global Investor Outlook | EMEA Insights
“Much of the ESG approaches have focused on the green credentials of new builds, but we will likely see an increased emphasis on the green refurbishment of existing buildings going forward.”
Savills Ireland Investment Market | Review and Outlook 2022
To find out more about our approach to ESG, what it is, and why we care, check out our Environmental, Social, and Governance page.
DUBLIN RENTAL MARKET
Frequently Asked Questions
