Ires was forced to shave €45.6 million — or 3 per cent — off the gross value of its portfolio last year, mainly as investment property assets were hit amid rising interest rates. The European Central Bank hiked its benchmark deposits rate from minus 0.5 per cent last July to 2 per cent in December.
To be sure, analysts at Barclays say it only expects Ires’s portfolio to decline by 8 per cent from its peak, as the Irish company’s gross rental income relative to the value of its assets is among the highest in Europe. They expect the property values across the wider sector to decline by an average of 15 per cent before hitting a low point in the current cycle.
Irish Life Investment Managers was known around that time to have been in talks to buy Ires’s upmarket Marker apartment block in Dublin’s docklands — with a reported price tag of about €70 million. However, nothing has come of it. Last week National Asset Management Agency chief executive Brendan McDonagh highlighted the issues of the private rental sector when he said he said the agency has dropped plans to deliver 400 apartments before it is wound down in 2½ years’ time. The PRS market has “almost disappeared”, he said.
Institutional investors and pension funds have been responsible for funding more than 15,000 apartments in Ireland in the past six years, it estimates. “If these had not been built the rental market would now be in a far worse position than it currently is.”