Glenveagh closes Blackrock deal with German cuckoo fund

The forward purchase deal for Newtown Gardens, a controversial 140-unit apartment scheme near the wealthy suburb’s village centre, is due to complete in Q3 2024.

The type of deal means the one and two-bed apartments will not come onto the open market for owner-occupiers to buy and will instead be rented out by Union.

It is the second transaction in Ireland by the Hamburg-based real estate investor after it bought the 8th Lock development in northwest Dublin last year.

"Blackrock is considered as one of the most desirable and sought-after residential addresses and benefits from nearby public transport, close proximity to Dublin City Centre, the amenity rich Blackrock Village and Seapoint Beach,” says Friedrich Georg Warmbold, Head of Investment Management Residential at Union Investment.

“Due to the structural shortage of high-quality rental accommodation in affluent areas, we expect demand to remain strong in future.”

Glenveagh chief executive Stephen Garvey last week said the Government should change planning rules to favour more “own door” suburban housing development rather than apartment building.

He said apartments were too expensive to build and were not sufficiently supported by demand either from individual homebuyers 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 stirred protest in Ireland for displacing individual buyers in an extremely tight property market.

The funds buy entire schemes before they are even built, meaning potential owner-occupiers never get a chance to bid for the homes.

Last year the Government added a punitive 10pc stamp duty charge to such transactions, but finance minister Paschal Donohoe added an amendment exempting funds that leased the properties back to the local authority.