The residential investment market is undergoing a fundamental change in ownership structure. The small “buy to let” guy is being replaced by institutional type investors and property companies as purchasers. We call them the “Super Landlords”.
The apartment market (both investor and owner occupier) has deteriorated sharply since 2008. Since then, banks and receivers have been dealing with the unsold and unfinished schemes while awaiting an improvement in market sentiment and values before effecting sales. During this time many of them have fitted out apartments and let them on short 12 month leases as a means of deriving income to help support the outstanding debt and ongoing costs. As a result, a growing number of completed residential blocks have presented themselves to the market in single lots. Most of these have income from short term tenancies in place.
Over the past 18 months there has been some significant apartment scheme sales including the Alliance Building on Barrow Street, Sandford Lodge in Ranelagh and most recently Clancy Quay in Islandbridge. In all cases, the buyers and under bidders were considered “Super Landlords”.
The attraction to the “Super Landlord” is simple – strong cash flow already in place with the ability to increase returns in the short to medium term through active asset management and continued rental growth. In addition, as capital values increase there is the potential of higher returns from “breaking up” schemes and selling off individual blocks or apartments.
As the banks continue with their sales programme, we estimate that approximately 2,000 apartments will come to the market over the next 12 months and the likely buyers….. the new “Super Landlords”.