On the French Riviera, the yacht-dripping city of Cannes may be best known for its film festival in May but each March wealthy individuals of a different kind throng the resort.
Mipim, Europe’s biggest annual real estate trade show, is held on the Boulevard de la Croisette, a 2km stretch of road along the shore of the Mediterranean. The event gives estate agents, developers and investors an opportunity to network, and do deals, in the sunshine.
Irish property players have long attended the hooley but this year, for the first time, an official Irish contingent turned up. The Ireland Strategic Investment Fund (Isif) hosted a real estate investment pavilion. Despite unusually rainy weather, Isif put on its sunniest disposition to promote the country as a destination for investment in homes, workplaces and infrastructure.
It has slowly dawned on the Irish government that far from being vultures or cuckoos, international investors have an important role to play in building Ireland out of a housing and infrastructure crisis. A report by the Department of Finance in June found that €20.4 billion was needed in development finance each year to build 50,000 homes annually. About €16.9 billion of that would have to come from private capital sources, it said.
Housing completions last year came in at 30,330 homes, down 6.7 per cent on 2023 and nearly 25 per cent below the 40,000 that the government had promised. The decline coincided with a slowdown in investment from international investors.
“We can see the stark reality of the impact of the withdrawal of institutional investment,” said Pat Farrell, chief executive of Irish Institutional Property, a representative organisation for Irish developers such as Ardstone and Cairn and international investors such as Kennedy Wilson and Henderson Park.
“We had a complete collapse in apartment completions,” Farrell said. “It has translated to a nearly anaemic output of housing.”
Alan Merriman — founder of Elkstone, an Irish investment house, which had a presence at Mipim — said international investment, in the residential property market particularly, was “a good thing, a necessity and in everybody’s self-interest”.
He added: “There are different types of international capital needed and we need help across the entire spectrum. We need it in terms of PRS [private rental sector], student accommodation, social housing and senior living. We need it at different stages of the process: at development stages, at pre-planning, in terms of high-rise and low-rise, and we need long-term permanent capital.”
The question is, how does Ireland attract international investors?
Martin Towns, deputy global head of real estate with M&G, a property investor based in London, said some “tweaks” were needed by the Dublin government to “tilt a bit more of that capital back towards Ireland”.
Of the €40 billion worth of real estate that M&G manages globally across 26 countries, it has invested €1.5 billion in Ireland, the bulk of it in the residential sector. In February 2023, it paid €99.5 million for Richmond Homes’ build-to-rent apartment development at Eglinton Place in Dublin 4. A couple of months later its private and alternative assets business paid €31.3 million for 67 social housing flats built by Barina, in the Dublin suburb of Blackrock.
Towns said “the underlying strength of the Irish economy and its growth potential” were reasons for the company’s continued and growing investment in the market.
Those “good fundamentals” have kept other international investors interested in Ireland. For example, Ardstone, a developer based in Dublin, recently raised €300 million from international funders, which it will invest in the social and affordable housing sector.
That brings to nearly €2 billion the money that Ardstone has raised from international investors in recent years. Some of that has come from the real estate arm of CBRE Investment Management, a New York-headquartered investment house that has more than $146 billion in assets under management.
CBRE IM has taken a big position in Ireland, investing more than €1 billion here, the bulk of it in residential property. It also participated, alongside Isif, in Iput’s €115 million capital raising, announced this month, to develop the first phase of Nexus, a logistics park in north Dublin.
The reasons for its interest in such a small country are many: we have a growing migrant workforce, job growth and an unemployment rate of just 3.9 per cent. Aside from a glitch in 2023, Ireland’s GDP has continued to grow; the economy is strong. The country also has a vast shortage of homes.
Sander van Riel, head of continental Europe for CBRE IM’s indirect real estate strategies business, manages Irish investments on behalf of about 20 clients, many of them long-term pension fund investors and insurance companies. He said CBRE IM was “very happy” being in Ireland, flagging the country’s attractions such as “the strength of the economy”, a “national debt that is very well under control”, and the quality of near-zero energy newbuilds.
Towns of M&G said Ireland was not unique in experiencing a pullback of foreign investment but it had been “slightly stronger” here than in other places. The reasons become clear when one considers CBRE IM’s experience in Ireland. In 2019, it bought three plots of land in the hope that the planning system would be simplified.
“We’re still not building, so that has been disappointing,” Van Riel said.
Towns said the length of time it took to get developments through planning and the uncertainty surrounding the planning system had created “hesitancy from investors”.
He added: “It can take quite a long time to get consent to build new schemes and that serves to limit the speed at which development can happen. But it also creates a bit of uncertainty for investors, as to how long it’s going to take and whether consents will be secured.”
In 2022, four years after it first invested in the residential sector in Ireland, CBRE IM paused its investment in the market when the government’s 2 per cent cap on rent rises kicked in.
The Economic and Social Research Institute (ESRI) pointed last week to rent controls as a reason for a 24 per cent fall in the building of flats last year. Just 8,700 apartments were built in 2024, compared with 11,500 in 2023.
While controls help reduce rents for those already in the market, they have a knock-on effect of restricting new building and supply, the ESRI said. Rent pressure zone legislation, which is due to expire at the end of this year, was a probable barrier to construction, it also found.
“We’re closely watching the residential space and if we get more clarity on rent regulations we will start topping up what we have,” Van Riel of CBRE IM said.
Nick Ashmore, director of Isif, said it was clear from discussions at Mipim that investors “value simplicity and consistency in policy around homebuilding and development”.
Donal O’Neill, chief executive of Ardstone, said his company was “working collaboratively with policymakers to encourage constructive and transparent discussions that facilitate appropriate policy for both public and private”.
Even if Ireland gets its policy right, it will face international competition for investment, and there was nothing like an international conference to remind attendees of its place in the world. Ireland was one of many countries to showcase at Mipim, alongside Albania, Saudi Arabia, the UK, France, Brazil and Egypt.
There was even a bit of jealousy when London brought out the big guns. Sadiq Khan, its mayor, hosted a seminar with some carefully choreographed questions from each of the British capital’s boroughs. Khan was there to “drum up business” for his city. He was seeking investment of £22 billion (€26.3 billion) in 20 projects across London.
Eddie Byrne, chief executive of the listed Irish Residential Properties Reit, Ireland’s biggest private landlord, pointed out that every big city in the UK had a stand at Mipim, including Belfast.
“These guys were selling their cities individually and collectively too. The reality is we’re in an international market, so we are competing for capital. What Ireland needs to do is have a very clear message about what we offer as a country,” Byrne said.
Merriman, of Elkstone, said the housing sector was not just competing with other jurisdictions for international money, but also with other sectors. “Housing is just a subset. It is competing with digital infrastructure, healthcare assets and data centres. We have to compete to get [investment] and we have to build an ecosystem that will take away the friction points.”
Property developers have called on the government to set up an IDA-type body to attract inward investment into the property sector. Ireland’s focus should be on creating an environment that seeks to attract and keep international capital consistently, they feel.
“Investment in real estate is no different to investment in pharmaceuticals and healthcare,” Byrne said.
While the government has introduced schemes to encourage investment in housebuilding such as Croi Conaithe, a fund to support the building of flats for sale to owner-occupiers, and the Secure Tenancy Affordable Rental scheme, which is intended to encourage the construction of cost-rental homes, there is a consensus in the market that they are not fit for purpose in attracting the kind of international investment that is needed.
Farrell, of Irish Institutional Property, said a “more innovative approach” was needed to secure foreign support. Commentators also called for Isif to set up a residential property fund in which it would be the anchor investor but would bring in co-investors.
The Irish contingent will be back in Cannes next year, hoping for better weather and a better property investment climate back in Ireland.
