Real Estate: Review 2016
09 March 2017
One of the most active sectors in the Irish economy both publically and privately continues to be real estate.
Some highlights include:
Many current challenges facing the Irish real estate sector continued, such as a housing supply shortage and issues in the rental sector. Attempts were made in 2016 to address these issues with the introduction of new legislation and governmental action plans.
Government’s action plan on housing and homelessness - a prime opportunity for real estate development
2016 saw the publication of the Government’s “Rebuilding Ireland – Action Plan for Housing and Homelessness” (the "Action Plan"), creating five targets to achieve the aim of building 175,000 new housing units by 2021. This was a direct response to the residential housing crisis in Ireland. The Action Plan’s main pillars are to:
- address homelessness;
- accelerate the social housing development process;
- build more private homes;
- improve the rental sector; and
- make better use of existing housing stock.
In order to achieve these aims the Government envisages a combination of public sector house builds, better use of existing resources, funding for relevant infrastructures and a more effective regulatory environment, with particular emphasis on large-scale developments infrastructure and planning reform. The Action Plan is ambitious and welcomed. Implementation of the Action Plan will involve building more homes by providing investment for social housing builds and opening up land supply and low-cost state lands.
This Act was introduced to facilitate the implementation of certain aspects of the Action Plan and the Government’s Rental Strategy which was also published in 2016. The Act’s aim is to deal primarily with the current housing supply shortage and to tackle issues in the rental sector. Key provisions of the Act include:
- the introduction of a fast-track planning process for developments consisting of 100 or more houses and for student accommodation of 200 or more bed spaces;
- the introduction of Rent Pressure Zones (“RPZs”) and rent caps;
- the extension of Part 4 tenancies from four years to six years;
- the restriction on landlords terminating tenancies of 10 or more units within the same development within a specified six-month period where they intend to sell the properties; and
- the repeal of the right of landlords to terminate a Further Part 4 tenancy within the first six months on no stated grounds.
Primary care comprises all of the health or social care services that you find in the community, outside of a hospital campus. There are currently 92 centres in operation in Ireland. Of these, 45 were developed directly by the Health Service Executive ("HSE"). 47 were privately developed, with approximately €19 million in annual rent being paid by the HSE.
In May 2016, an agreement was reached with the European Investment Bank for a €70 million loan to develop 14 centres throughout Ireland. All 14 sites have secured planning permission. UK specialist developers, such as Primary Health Properties, have committed to several investment deals in Ireland. The HSE aims to have between 200 and 250 centres operating in Ireland in the coming years. The availability and feasibility of suitable site locations and access to adequate financing are critical factors to the continued growth of privately-developed primary care centres. It is also crucial that developers can demonstrate to the HSE and prospective funders that they can secure the required number of local GPs as tenants.
What's on the horizon for 2017?
With events such as Brexit and the US election leaving some uncertainty in the air for 2017, hopes are rising for some commercial relocation activity from the UK to Ireland resulting in increased demand for office space in Ireland. Some well-known retail giants are also expected to establish stores in Ireland this year for the first time. The country is likely to see an increase in development activity, with economic research for the year ahead predicting growth of at least 3.5% being achieved this year compared to 2% in the US and 1.6% in the UK.
For more information, please contact a member of our Real Estate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.