Glenveagh strikes deal with Blackrock and German cuckoo fund
Glenveagh Homes has sold an upcoming development in Blackrock, Co Dublin to German investment fund Union Investment.
The forward purchase agreement for Newtown Gardens, a controversial 140-unit apartment scheme near the center of the affluent suburban village, is expected to close in the third quarter of 2024.
The type of deal means the one- and two-bed apartments will not be put on the open market for purchase by owner-occupiers and will instead be rented out by Union.
This is the second transaction in Ireland by the Hamburg-based property investor after buying the 8th Lock development in north-west Dublin last year.
“Blackrock is considered one of the most sought after and desirable residential addresses and benefits from nearby public transport, proximity to Dublin city centre, the affluent village of Blackrock and Seapoint Beach,” says Friedrich Georg Warmbold, Head of Residential Investment Management. at Union Investments.
“Due to the structural shortage of high-quality rental housing in affluent areas, we expect demand to remain strong going forward.”
Glenveagh chief executive Stephen Garvey said last week that the government should change planning rules to favor more suburban housing development ‘on its doorstep’ rather than the apartment block.
He said the apartments were too expensive to build and were not sufficiently supported by demand from individual buyers or institutional investors.
Glenveagh derives the majority of its revenue from building apartments, according to its most recent interim results, but the margin on the sale of individual units is higher.
So-called cuckoo funds such as Union Investment have sparked protests in Ireland for displacing individual buyers in an extremely tight property market.
The funds buy entire projects before they’re even built, meaning potential homeowners never get a chance to bid on the homes.
Last year the government added a punitive 10% stamp duty to such transactions, but Finance Minister Paschal Donohoe added an amendment exempting funds that leased the properties to the local authority.