Brexit Jobs Spur Dublin Real Estate Boom
Bankers and lawyers relocating to Dublin while Brexit reshapes London’s financial industry are fueling a property boom that’s got the attention of debt investors.
Dilosk Ltd, which lends to buy-to-let investors in Ireland, is already planning another offering of securities repackaging its own mortgages after an inaugural deal last week, Chief Executive Officer Fergal McGrath said in an interview. That deal saw orders for three times the debt on sale.
New jobs in Ireland created by the U.K.’s coming exit from the European Union “means those coming from abroad are competing with domestic tenants,” McGrath said, citing banks including Barclays Plc that are hiring in the Irish capital. That means loans backed by high-end properties leased to financial professionals will be “more prevalent in the next deal” Dilosk arranges, McGrath said.
Dilosk has become the biggest player in Ireland’s buy-to-let sector, which lent a combined 272 million euros ($307 million) to landlords last year, up from 214 million euros in 2016, according to figures from Ireland’s Banking & Payments Federation.
The country’s banks have been "tepid" in getting involved after buy-to-let was among the worst hit sectors when a speculative property boom turned to bust, according to alternative-credit analysts Integer Advisors.
Dilosk’s 215 million-euro mortgage-backed deal last week saw 700 million euros of demand for five tranches of notes, Dilosk said in a statement Monday. The underlying home loans were made through ICS Mortgages, which it bought from the bailed-out Bank of Ireland in 2014.
The junior tranche of that securitization is retained by Dilosk, meaning the company’s shareholders including McGrath and London-based Chenavari Credit Partners are first in line for losses if landlords default on their mortgages.
“Everything we’ve originated is fully performing - it’s still a short period but the market is strong,” McGrath said.
Central-Dublin house prices have doubled since a 2013 trough, according to real estate website Daft.ie. A post-crisis slump in building followed by a rapid economic recovery has pushed rents 37 percent above their 2008 peak.
A one-bed apartment within walking distance of Barclays’ new office in Dublin currently yields almost 2,000 euros a month in rent. The average mortgage payment for a similar-sized property in the same neighborhood is around 1,200 euros, according to Daft.ie.
Dilosk’s previous mortgage securitizations have comprised loans first originated by others such as portfolios from the Bank of Ireland and Leeds Building Society. Later this year Dilosk plans to start lending to owner-occupiers, who Irish central bank rules allow to take on more leverage than landlords.