The rental market has been very important in Ireland, and its activity over the last ten years has seen significant demand in the main part of Dublin city. Also, in many suburban locations there has been a demand for a range of accommodation types. New PRS schemes have been brought to the market and continued to rent exceptionally well. The demand has assisted in underwriting for investment activities in these locations and has formed a basis of underwriting for the expanding market in 2021.
The ability to understand sub-market characteristics while correctly estimating rents in specific locations will be critical, and it is important for acquisition, development, and investment going forward. Economists expect strong demand in the lettings market in 2021, especially as the economy starts coming back. There is an expectation that there will be an inflow of multinational employees starting in March of this year. The impact of the pandemic will not be fully realized in the rental market for many years.
Many parts of the Irish population will still have to work from home in the near future, even with the optimism behind the Covid-19 vaccine. The impact on the location of in-demand properties and their characteristics will be seen in 2021 as well. Large properties with opportunities for remote work, will be very popular for Irish patrons. Also, areas in common neighborhoods will be important for Irish families as well. There is going to be an increasing focus by renters on higher quality accommodation, especially when it includes build-to-rent traits. Build-to-rent properties have progressed extensively in the Irish market.
A sizeable amount of existing stock in Dublin that was built prior to 2008, has actually aged quite well at this stage. This stems from unsupportive government policies aimed towards small investors in the Private Rented Sector. These properties have seen limited upgrades since they were built, and there is not much of an incentive to improve them. Many properties have been sold off into the owner occupier market, based on the recovery of prices.
An immense proportion of these reductions are attributable to smaller owners selling their rental properties and leaving the sector permanently. The contraction in supply is interesting considering the increasing nature of new construction delivery. This brings to light the challenges that the industry and wider economy will face. Based on the factors in the market, rents in Dublin should remain steady for many years with the optimism that there will be increases in other locations.
Written by John Spurrier, Mortgage Analyst for Online Application