Why are investment funds buying up Irish Property?

Large-scale private rented sector (PRS) investors, sometimes called vulture or cuckoo funds, have rapidly become a major force in the Irish property market over the last few years.

As recently as 2017, these funds were a minor and insignificant part of the housing market. However, these firms have spent more than €6 billion buying Irish homes, apartment buildings, and commercial properties over the last three and a half years.

The cuckoo funds show no sign of slowing down in 2021, as they have spent €1.5 billion so far this year, according to recent figures from estate agents and property adviser JLL. Most of these funds are backed by international investors, and have quickly become big players in the market, particularly investing in deals for new apartments in Dublin.

But what is driving this relatively new and rapidly growing force in the market?

Analysts say that an influx of cash in European markets, lack of yields in traditional assets including bonds, and the huge surge in housing demand and high rent prices in Ireland have combined to create a very lucrative …

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Central Bank warns of a financial stability threat due to cuckoo funds

Cuckoo funds or offshore venture funds in Ireland’s commercial property is causing apartments to be bought up by the big businesses that make up the cuckoo funds. The increasing dominance of offshore investment in Irish commercial property is causing risks that they will also import a boom bust cycle. According to research from the Central Bank, the threat is also that house prices will fall and the banks will be weakened.

Warnings have been definably seen as two of the biggest property investors in recent years look to sell a large portion of their office blocks. The Central Bank continues to explain that foreign financed funds are more vulnerable to negative shocks outside of Ireland. In other words, foreign investors are not as concerned with the Irish economy as they are concerned with the general economy and their investments. Foreign investors are not concerned with the health of the Irish economy and could potentially get rid of all Irish assets to pursue easy profits elsewhere.

Although there is high risk associated with cuckoo funds and foreign investors, these investments are …

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Government denies the warning signs of Cuckoo Funds

Cuckoo Funds has been recently used to describe big investors investments poured into developing build to rent housing. However, on average the developments funded by cuckoo funds are not affordable for the average individual or family. Some of the main investors that comprise of the cuckoo funds are large institutional investors like pension funds, real estate investment trusts (REITs) and special private rental firms. Investors are increasingly interested in attempting to tap into the growing demand for Irelands rental market.

Cuckoo funds are known for buying properties and charging insanely high and unaffordable prices for the properties. However, the Housing Minister Murphy has denied that housing is unaffordable. Murphy continued to argue and defend the government’s record on housing and claimed that the government has protected renters.

However, individuals have accused the government of ignoring the red flags of activities related to cuckoo funds. Multi-national venture funds have been able to sweep up properties and resell them for immense costs. Cuckoo funds have created 3,000 new housing units in 2018.

The government has not yet claimed to see the dangers …

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Cuckoo Funds

Cuckoo Funds has been recently used to describe big investors. Some of the main investors that comprise of the cuckoo funds are large institutional investors like pension funds, real estate investment trusts (REITs) and special private rental firms. These investors pour money into developments that cannot be purchased by the average individual or family. The developments funded by “cuckoo funds” are classified as build-to-rent. Investors are increasingly interested in attempting to tap into the growing demand for Irelands rental market.

These cuckoo funds are named accordingly because they have been seen to push first time buyers out of the market. Cuckoo funds have had significant impacts on investors and buyers in the market.

Benefits to the large investors can be defined by the ability to build apartments that do not have restrictions on maximum number of apartments per floor. Another benefit for a developer willing to invest in build to rent is that they are allowed flexibility in comparison to other developments in regard to amenities and storage. These cuckoo funds are also seen as controversial due to favorable …

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