Residential Development Funding Landscape 

In this article, Daniel Lockley, a manager in Deloitte Ireland’s Debt & Capital Advisory team explores the Irish residential development funding landscape. House building levels in Ireland have been exceptionally low for a number of years, resulting in housing stock levels falling to their lowest point since 2007. This housing shortage stems from the low levels of house building during the period 2011 to 2016.

Given the pent up demand for new houses in attractive locations and the shortage of housing stock available, many housebuilders are looking to scale their business in order to capitalise on this opportunity. Deloitte debt and capital advisory advise property acquirers and housebuilders on implementing appropriate funding strategies to support this growth strategy.

Key Observations

  • There is a significant increase in the level of capital available for strong promoters
  • There is a strong appetite to fund residential developments in the main urban centres of greater Dublin, Cork and Galway with more limited appetite outside of these regions
  • The range of capital available for the residential development sector includes senior debt, unitranche, mezzanine debt and equity with some funders having access to capital from the ‘Irish Strategic Investment Fund’
  • The key to accessing this capital is a well prepared proposal that will stand up to a funder’s due diligence process. A typical due diligence process focuses on the promoter’s previous experience, management team, building capacity, key contractor relationships, execution ability and access to pipeline sites
  • Funders are currently favouring site-by-site funding structures as it gives them greater visibility and control. We expect to see the evolution of a more corporate type debt funding market for this sector in the medium term

April 2017

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