a
Print
version

How to Earn Up to 10% Per Annum on Real Estate in Dublin. Facts About Housing in Ireland

  • 9
Over the past few years, we have seen a drop in the return on investment in European real estate. This is quite understandable: cheap mortgages, negative deposit rates and a lack of alternative investment options. But there are still locations where you can earn up to 10% with minimal risk. About the Dublin real estate market-in the presentation of Spire Capital partner Sergey Kumekov.

What you should know about Ireland

Ireland is a relatively small country, a home to 5 million people. However, in terms of the level of economic development, Ireland confidently falls on the top lines of various ratings. Thus, in terms of GDP per capita, the country ranks fifth in the world. Ireland has been the EU's growth leader for the past six years, and its GDP has increased:

  • by 9.1% in 2017,
  • by 8.5% in 2018,
  • by 5.5% in 2019.

The level of economic development in Ireland is perfectly characterized by the ratings from the IMD World Competitiveness Yearbook 2019 report. According to this report, the country is

  • one of the top 15 countries in the world with the most innovative economy;
  • the first in the world to attract foreign investment - according to the aggregate assessment of their volume and quality;
  • #6 in the world in terms of economic freedoms;
  • #7 among the world's most competitive economies;
  • #1 in the world for attracting and retaining talent;
  • the first in the world to stimulate investment in the country's economy.

The last two points require a separate comment. Everyone, of course, has heard about tax preferences in Ireland. Thanks to them, the country attracts large businesses. Low corporate tax rate (12.5%), research and development tax deduction mad PwC's 2019 report rank Ireland the first in Europe for ease of calculating and paying business taxes.

The crisis of 2020 affected Ireland, but quite moderately so far. According to the country's Central Statistical Office, GDP declined by 6.7% in the first half of 2020. But in the third quarter, after the easing of quarantine measures, growth was recorded – 11.1%. Despite the restrictions re-introduced in November 2020, the agency's forecast for the whole year is positive - plus 1-2%. KBC Bank Ireland generally forecasts growth of 2.5%. And this is against the background of the expected fall in the GDP of the Eurozone countries to minus 8%.

Experts from the IDA Ireland agency also predict that Ireland will be slightly affected by the pandemic in 2020. The reason is in the structure of the country's economy. For example, 14 of the 15 largest manufacturers of medical equipment and all major pharmaceutical companies in the world have their headquarters here. Ireland ranks seventh in the world in terms of pharmaceutical exports.

The scale of the presence of large international businesses is easier to assess if you list the well-known multinational corporations whose European headquarters are located in Dublin. Brexit played an important role in the concentration of large international business in Ireland, especially in the financial companies and banks.

Also read: Property Prices in Ireland Increased by 83%

Investments in Dublin. Why is it interesting?

Well, what about real estate? Theoretically, it is clear why it is interesting for investors: the economy is growing, demand is increasing, and then there is the mass arrival of high-paid expats in the country... the market is trying to match.

Due to the fact that the most active growth occurs in the housing rental market, in terms of investment attractiveness, residential profitable real estate is in the first place. There is a chronic housing shortage in Dublin, and this imbalance will continue for a long time to come. If during the period of rapid economic growth in the capital of Ireland, office construction was actively carried out, then the volume of housing construction was much more modest, which only increased the disparity.

It is already clear that the 2020 pandemic will significantly affect the dynamics of new housing starts. In the second quarter of 2020, most construction projects were frozen, and even the growth in construction activity in the third quarter did not turn the situation around – on an annual basis, there was still a decline in the delivery of residential properties by almost 14%.

An additional factor affecting the situation in Dublin is population growth. In 2019, 1.38 million people lived in the capital, five years before that-100 thousand less.

New housing is being built in a limited way, especially in the center. Back in 2019, Ronan Lyons, a professor of economics at Trinity College Dublin, said in a study that in order to meet demand, about 500 apartments had to be introduced weekly (!) in Dublin for three years. This is absolutely unrealistic at the moment. For example, in the relatively quiet first quarter of 2020 in terms of the pandemic, only 1,658 housing units were commissioned in Dublin.

Dublin, Ireland

Trends in Real Estate Market in Ireland

Price dynamics

Until 2020, according to the Central Statistical Office of Ireland, real estate has become more expensive: for the period from 2013 to 2019, prices increased by 56%.

Data on the dynamics of prices for 2020 so far exceeds expectations. It is already clear that property prices in Dublin last year remained at the same level (for more information, see the article in The Irish Times of January 4, 2021).

In the market of profitable real estate, an increasing role will be played by large foreign investors, who began to look at the Dublin market before 2020. Here are just some examples of deals involving well-known foreign players.

  • Deutsche Bank acquires Westend Retail Park in Dublin for €148 million
  • The Heitman group from the United States bought 214 apartments in Dublin for €52 million
  • German Patrizia Foundation invests €52.5 million in a building in Dublin's docklands area
  • German company Union Investment buys newly built office in Dublin for €190 million
  • Swiss LIfe asset managers decide to invest €27 million in Dublin

Rates and returns

Economic growth has naturally led to a significant increase in rental rates in Dublin. In 2019, the capital of Ireland was among the top 5 European capitals in terms of rental prices (Employment Conditions Abroad International (ECA) report). Given the lack of housing in the city, especially in the central areas, it is not necessary to expect a change in the situation.

According to the report Daft.ie, the average monthly rent in the country is €1.3 thousand. The stakes are higher in Dublin. For example, renting a three-bedroom apartment in the suburbs of Dublin will cost €1.7-2.2 thousand, in the city - €1.8–2.6 thousand. And here is the data on the average rental rates of a one-bedroom apartment in Dublin (source: Central Statistical Office).

 

Quoting conditions of Prian.info materials

Share the link:
Tags: Ireland, Market Analysis, Investment, Real Estate, Taxes and fees

Read also

The volume of investments in European hotels has declined. But the situation will get better
This data is provided in the report of the HVS consulting company.
European lawmakers have agreed on a draft regulation for data collection and sharing for short-term rental services
The landlords and online platforms will have to send monthly reports to the authorities.
Eurostat: housing sales in the EU have slowed down in 2022 after increase in 2021
However, in some countries the dynamics turned out to be quite the opposite.
EU tourism performance exceeds pre-pandemic levels
The number of nights spent in EU tourist accommodation reached 2.9 billion in 2023.
The European hotel sector has fully recovered from the pandemic. However, there are nuances
Eurostat has named the most successful countries in this regard.
The easiest сountries to get сitizenship in the EU have been revealed
The study was conducted by the Canadian immigration agency CanadaCIS.

Interesting to read

News and articles on the topic «Ireland»

EU tourism performance exceeds pre-pandemic levels

The number of nights spent in EU tourist accommodation reached 2.9 billion in 2023.

  • 12.03.2024
  • 24

The easiest сountries to get сitizenship in the EU have been revealed

The study was conducted by the Canadian immigration agency CanadaCIS.

  • 18.01.2024
  • 111