Prime build-to-rent property yields in Dublin have hardened to 3.85% owing to an increase in investment in the sector.
This figure compares with 4% for prime office properties and 5.1% for prime industrial assets, according to CBRE.
The BTR sector accounted for 30% of investment in Ireland during 2018, up from 4% in 2015. In total, more than €1.2bn (£1bn) was deployed in 2018, compared with just over €70m in 2012.
Marie Hunt, executive director and head of research at CBRE, said “As further transactions complete over the coming months and set new transactional evidence, we expect prime yields in this sector to compress further.
“In fact, investment in this sector is only compromised by a shortage of investible stock, such is the volume of capital looking to deploy.
“Interestingly, an increasing proportion of investors seeking to invest in the BTR sector in the Irish market are now willing to look beyond core city centre opportunities and are focusing attention on good suburban locations on key transport nodes where viability and affordability are considerably better.”
In December, Hines and partner APG Asset Management announced plans to spend €1.1bn in Dublin’s BTR market. The pair have already begun building the first flats for their 1,269-unit Cherrywood Town Centre scheme.
Hines and APG formed a joint venture in January 2018 to develop the €450m scheme in the south of Dublin.
In November, Canadian firm QuadReal Property and US asset manager Round Hill Capital also bought a BTR scheme in Dublin through a joint venture. It was their first residential acquisition in the Irish capital.
The scheme is located at Northwood, Santry, Dublin 9. It is being built by Dublin-based Cosgrave Property Group and will provide three one-bed, 195 two-bed and 18 three-bed flats across three six-storey buildings.
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