As part of Bisnow’s DUBLIN’S PROPERTY PULSE event on 19th March, industry leaders, investors, and experts explored the intricacies of Dublin’s dynamic real estate market. Total Fitout, a leading furniture fit-out company that specialises in the residential sector with experience in student accommodation schemes, sponsored and attended the event, which provided valuable insights into investment opportunities, sustainable development trends, and the evolving landscape of Dublin student housing. Total Fitout’s goal with this blog is to highlight the key takeaways and discussions from each panel, shedding light on the future of the real estate industry in Dublin.

Panel 1: DUBLIN’S MARKET BREAKDOWN: INVESTMENT INSIGHTS

Bringing together a wealth of industry expertise, the panel discussion was adeptly moderated by Sean Twomey, Partner at Addleshaw Goddard Ireland, and featured insights from Lorcain Egan, Co-Head of Europe at Starwood Capital; John Doddy, Head of Debt & Capital Advisory at Deloitte; Nicholas Lyons, Senior Director at Bank of Ireland; and Mairead O’Sullivan, Managing Director at SitusAMC. Their discussion delved into the intricate investment landscape of Dublin, shedding light on emerging opportunities and strategic considerations for investors.

Opportunistic Returns in the Current Market

Amidst evolving market dynamics, investors are exploring new avenues for equity-like returns, particularly through debt instruments. This shift in investment strategies underscores the need for proactive risk-taking and operational efficiencies to drive returns in the dynamic real estate market. The panel emphasised the importance of adaptability in navigating market uncertainties while ensuring sustainable returns. Taking a long-term view and being courageous are key to capitalising on opportunistic returns, as highlighted by one speaker, who added that rebalancing portfolios requires patience and strategic thinking.

Diversification Strategies for Risk Mitigation

Mitigating risks and ensuring consistent returns necessitates a diversified portfolio approach. Panellists stressed the significance of maintaining a long-term vision, exercising patience, and employing strategic thinking to effectively rebalance portfolios and navigate market challenges. Diversification emerged as a cornerstone strategy for risk mitigation in the volatile real estate landscape.

Global Investment Dynamics and Ireland’s Appeal

Ireland’s allure as an investment destination shone brightly, attributed to its stable economy, high quality of life, and supportive business environment. The discussion highlighted Ireland’s attractiveness as a business destination due to its robust economy, quality of life, ease of doing business, and strong banking system. However, maintaining political stability and addressing housing shortages were deemed imperative for sustaining Ireland’s global competitiveness and attractiveness to investors. Despite initial expectations, Ireland has shown resilience, outperforming other markets in asset value retention, making it a favourable investment location. A number of areas for improvement were identified, such as the planning system and tax policies, urging policymakers to address these issues to continue attracting investors. The panel emphasised the need for continued efforts to bolster Ireland’s investment appeal on the global stage.

Profitability Amidst High Debt Levels and Refinancing Challenges

Despite prevailing high debt levels, stabilising interest rates provide a more secure investment environment. Prudent lending practices and effective stakeholder collaboration were identified as essential strategies for navigating impending refinancing requirements and ensuring profitability amidst evolving market conditions. The panel underscored the importance of proactive financial management to mitigate risks associated with high debt levels.

ESG Integration and Investment Trends

Environmental, Social, and Governance (ESG) principles are exerting a growing influence on investment decisions, with a heightened emphasis on sustainability metrics. Nonetheless, the panel underscored the necessity for clearer criteria for measuring and reporting ESG performance to facilitate ongoing integration and evolution within the real estate investment landscape. Overall, the panel recognised the increasing importance of ESG principles in shaping investment trends in the real estate market, emphasising the ongoing need to refine measurement standards and incorporate broader ESG considerations beyond environmental factors. Additionally, the panel stressed the importance of aligning investment strategies with sustainable practices to nurture long-term value creation.

Concluding Remarks: Cautious Optimism

Despite sector-specific challenges, there existed a sense of cautious optimism for Dublin’s real estate market. Increased activity and a willingness to invest signalled improving market conditions, offering opportunities for growth and resilience amidst uncertain times. The panel concluded on a hopeful note, expressing confidence in Dublin’s resilience and its potential for continued development and investment opportunities.

Panel 2: TOP TREND: SUSTAINABLE DEVELOPMENT

In this enlightening panel discussion, skilfully moderated by Mark Faithfull, a Bisnow reporter, industry leaders Damien Kilgannon, Real Estate Director at Fine Grain Property; Emma Leonard, Director at Sigma Retail Partners; Ward Frisby, Development Director at Greystar Ireland; Michael Purcell, Director at Eagle Street; and Donal O’Donohue, Director at Coady Architects, delved into the critical trend of sustainable development in real estate. Together, they explored the evolving landscape of Environmental, Social, and Governance (ESG) principles and engaged in dialogue about sustainability integration, technological utilisation, and regulatory navigation.

Key Points:

      • Challenges in Evaluating ESG Impacts: Valuers lack comparative data, making it difficult to assess how ESG initiatives impact valuations.
      • ESG Impact Assessment Difficulties: ESG impacts are challenging to assess and integrate due to a lack of industry consensus. Assets failing to meet ESG standards often incur discounts, reflected in additional capital expenditures and extended compliance timelines.
      • Utility Usage Data Importance: Detailed utility usage data facilitates transparent transactions, providing buyers with accurate information about operational costs, strengthening credibility and trust.
      • Emphasising Data Measurement: Improving building performance requires measuring, monitoring, and reporting data.
      • Collaborative Approach with Occupiers: Collaborative efforts with occupiers foster deeper partnerships, transcending traditional dynamics and focusing on shared sustainability goals.
      • Data-Driven Strategies: Embracing collaboration and data-driven strategies can improve building performance and create positive outcomes for investors, clients, and the broader community.
      • Occupiers Driving Sustainability: Occupiers play a key role in driving sustainability initiatives, with investors, developers, and funders responding quickly.
      • Designing for Sustainability: Designing properties that facilitate sustainable choices for residents is crucial.
      • Optimising Existing Buildings: Optimising existing buildings before considering new construction aligns with local authorities’ resistance to teardowns and government policies.
      • Balancing Short-Term Demands with Long-Term Goals: Balancing short-term demands with long-term sustainability goals is critical in today’s real estate landscape.
      • Transformative Potential of Short-Term Investments: Short-term investments lay the foundation for sustainable long-term outcomes, advocating strategic alignment with tenant needs and market trends.
      • Ireland’s Conducive Environment for ESG Initiatives: Ireland is conducive for implementing ESG initiatives due to skilled talent and innovative technology.
      • Regulatory Pressure for ESG Strategies: Regulatory frameworks evolve, increasing pressure to adopt comprehensive ESG strategies addressing environmental, social, and governance concerns.
      • Key Themes of Collaboration and Data Sharing: Key themes include collaboration, transparent data-sharing, and recognition of ESG as a fundamental aspect of good business.
      • Unlocking Opportunities with ESG: Embracing ESG principles mitigates risks and unlocks opportunities for innovation, resilience, and stakeholder value creation in the real estate sector.

The panel concluded by emphasising the importance of prioritising ESG initiatives, leveraging available technologies, and aligning with evolving regulatory frameworks to drive meaningful progress towards a more sustainable built environment.

Panel 3: SECTOR IN FOCUS: STUDENT HOUSING DUBLIN OF THE FUTURE

Chaired by Clair Cassidy, Head of Real Estate at LK Shields, the third panel brought together industry experts to delve into the vibrant student housing sector in Dublin. Tom Anderson, Partner at NTM Capital, and Aaron Bailey, Head of Real Estate Projects at GSA, shared profound insights into demand factors, while Rob Keane, Managing Director at Reddy Architecture, provided invaluable perspectives on design considerations. Jane Crouch, Chief Operating Officer at Fresh Property Group, contributed nuanced insights into operational challenges and sustainability initiatives. The discussion, centred on evolving student preferences, design considerations, operational challenges, and sustainability initiatives, highlighted both opportunities and challenges for future development within the student housing sector.

Investment Appeal and Challenges:

Investors seeking reliable returns favour existing properties due to lower risks compared to new developments. Challenges such as high construction costs and inefficiencies in the planning system hinder student accommodation development. Outdated guidelines need updating to improve development efficiency. Additionally, Ireland’s high operational costs and government regulation impact project viability. Rental caps pose challenges to project viability and future margins, impacting investor appetite for student accommodation.

Navigating Market Dynamics

The panellists explored the complexities of market dynamics in the student housing sector, addressing challenges in keeping pace with the growing demand for Purpose-Built Student Accommodation (PBSA). Issues such as the scarcity of residential accommodation in Dublin and the intricacies of market dynamics were discussed in detail. The conversation highlighted the attractiveness of investing in existing stock as a viable option for securing stable returns in the current market climate. Moreover, the panellists emphasised the need for regulatory reforms to improve affordability and mitigate challenges posed by rental caps, which could significantly impact project viability and future margins for developers in the PBSA market.

Design Considerations for Student Housing

The evolving needs and preferences of students took centre stage, with a particular focus on essential amenities and services deemed crucial in PBSA developments, such as gyms, study spaces, and interactive social areas. Design considerations for PBSA projects were meticulously examined, encompassing adherence to standards, investments in sustainable building practices for long-term benefits and lower operational costs, the incorporation of diverse typologies, and strategic location selection near campuses and public transport hubs.

Balancing Student Needs and Budget Constraints

Strategies for navigating the delicate balance between student needs and budget constraints were explored, with a spotlight on energy efficiency and judicious expenditures in PBSA development. The discussion underscored the holistic approach to sustainability in both design and operations, emphasising early engagement with contractors and the cultivation of sustainable behaviours among residents.

Behavioural Considerations:

Educating residents about environmental practices fosters a sense of community and promotes sustainable behaviours. Innovative approaches, like gamification, aid in promoting sustainability.

Global Trends and Policy Recommendations:

Jane Crouch illuminated significant global trends affecting student accommodation demand, including shifts in English-led courses, and decreased international student enrolment in certain countries like the Netherlands and Canada. These changes have been implemented to alleviate rental pressures, highlighting the need for urgent PBSA investment in Ireland to avoid similar challenges. Regulatory reforms and addressing soft costs are crucial for feasible development, with refurbishment projects emerging as potential alternatives to new builds. Confidence in the long-term viability of the asset class underscores the importance of strategic investments and regulatory changes to ensure sustainable growth.

Concluding Remarks: Optimistic Outlook Despite Challenges

Despite the array of challenges, the outlook for student housing remained buoyant, propelled by the robust growth of educational institutions in Ireland and the enduring demand for high-quality accommodation. The panel’s deliberations offered illuminating insights into the complexities and opportunities within the PBSA market, underscoring the imperative for collaboration and innovation to effectively address the evolving needs of students and investors alike.

Bisnow’s DUBLIN’S PROPERTY PULSE event acted as a catalyst for insightful discussions, knowledge-sharing, and networking opportunities within Dublin’s real estate community. Total Fitout’s sponsorship and attendance emphasised its dedication to promoting sustainable development practices and instigating positive change in the built environment. As Dublin’s real estate market progresses, events like these are crucial in influencing the future direction of the city’s urban landscape.

By utilising diverse perspectives, embracing innovation, and nurturing collaboration, stakeholders can successfully navigate the intricacies of Dublin’s real estate market and discover fresh avenues for growth and development.

Total Fitout