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Just days after an “off-market” transaction which saw Deutsche Bank subsidiary DWS purchase 207 apartments in south Dublin, Minister Neale Richmond has claimed that “there’s something like 46 homes bought by large-scale investment funds in the last year”.
Speaking about the role of ‘vulture funds’ in the real estate market currently on the All Walks podcast, the Minister of State at the Department of Finance said that while investment funds had been welcomed into the Irish real estate market in the early 2010s because “we’d no one else to build property,” it “doesn’t happen now” on the same scale as a result of Government policies since then.
“They built, or bought, assets that no one was able to finish, no one was able to do the second fix, and they’d build to rent and they rented them out and they weren’t bad landlords, it just meant that people couldn’t own them. That went on for way too long… [I] accept that, no problem to acknowledge that,” Minister Richmond said, adding, “doesn’t happen now”.
“If you want to buy more than 10 homes, you’re going to pay a massive amount of stamp duty,” the minister told podcast host Greg McWilliams.
“We increased it again in the budget…there’s something like 46 homes… bought by large scale investment funds in the last year…it’s dried up,” he said.
The minister’s claims come just days after reports that German investor DWS has paid €97.5 million for a 207-unit apartment project in Killiney in south county Dublin.
The investor took part in a forward-purchase deal with Park Developments on behalf of two German institutional real estate funds, according to reports.
The properties are listed as available to rent from €2,150 per month, and feature a dedicated residents’ concierge service, a private gym, dedicated work areas and transport links to the city centre.
‘Vulture’ or ‘cuckoo’ funds are investment funds that bulk-purchase properties directly from developers, for use in the private rental market. They are typically backed by institutional investors, such as pension funds, a point referenced by Minister Richmond on the podcast.
“We overplay the role of funds – you can call them ‘cuckoo’, you can call them ‘vulture’, you can give them whatever name – ultimately, they’re institutional investors. Institutional investors could be anyone’s pension. You know, if you have a private pension, it’s being invested in institution, and they generally invest in property.
“There’s plenty of Irish funds, pension funds or otherwise, who’ve invested in commercial property and residential property here in Ireland and across. That’s what they are. You can castigate them and say they’re the enemy to our housing crisis, or you can say that they’re actually just a functioning part of any economy,” he said.
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