€1.7bn was pumped last year into the building of apartments

Those big investors are expected to remain highly active and influential in the private rental sector this year, the report said, as the shortage of standing stock means forward commitments will dominate the market.

Residential investment was the biggest segment of commercial real estate in Ireland in 2021, with 34pc of funds going to buy or fund homes to rent.

Last year was the second-biggest for investment in residential property, behind only 2019, when €2.9bn was pumped into the sector.

There was €5bn in investment last year, with €1.5bn going to office space and €1bn – or 20pc of the total – going to industrial properties, up from 2pc in 2016.

Around 71pc of the residential investment went on forward purchases, where an investor fronts the money to get a development built, which is then rented out.

This was well above the five-year average of 49pc. In total, 4,100 housing units were paid for with forward investments.

All of the top 10 private rental sector (PRS) transactions in 2021 were either part or wholly funded in this way, underlining the importance the PRS sector plays in bringing new supply to the market, Sherry Fitzgerald said.

The real estate firm noted that investment yields are expected to narrow this year.

Further, it is not clear what impact the war in Ukraine and inflation increases may have on investor return requirements.

However, the report noted that rents continue to rise, with the annual increase up to last month standing at 9.2pc.

“Lack of supply is the primary accelerant in this recent uptick in rental inflation, with the pandemic exacerbating an already stark situation,” the report said.

Sherry Fitzgerald said new dwelling completions last year were in line with 2020 and 2019, despite the construction sector being in lockdown for many months.

More than 30,000 housing starts would contribute to new supply of 26,000 units this year, rising to 30,000 and 35,000 completions in the next two years, the firm said.

Meanwhile, Bank of Ireland is cutting some of its mortgage rates in a move that defies market expectations.

The cuts come after ICS Mortgages increased some of its key fixed rates earlier this week, citing higher costs of wholesale funding, prompting fears that other lenders would follow with rate rises.

The European Central Bank is expected to raise its key lending rate by the end of the year, while mortgage rates in Ireland increased by the greatest degree in five years in January.

Despite this, Bank of Ireland is reducing the rate on its green mortgage to 1.9pc, and it will make it easier to qualify for this product.

It is also reducing the rate on what it calls its high-value four-year mortgage by a tenth of a percentage point to 2.20pc and allowing those borrowing €250,000 or more to qualify.

Previously, customers had to borrow €300,000 or more to be eligible for this loan.

Bank of Ireland launched the country’s first green mortgage in 2019.

It applies to those who are buying or building a home with a Building Energy Rating (BER) of B3 to A1.