German insurance giant Allianz has decided to pause possible investments in the Irish residential property market due to the potential reputational risk for its insurance business here, The Irish Times has learned.
It is understood that Allianz Real Estate, which manages a global property portfolio of €79 billion for the insurer, had been quietly evaluating a number of residential property investments here that would have given it a significant position as an institutional landlord in the private rented sector (PRS).
However, Allianz’s Irish insurance arm lobbied against the move on the basis of the potential reputational risk from the negative public commentary around large institutions owning and renting properties here amid a housing crisis, and being cast as a so-called cuckoo or vulture fund.
Allianz is one of the country’s biggest general insurers, with more than 700,000 customers, according to its website.
Allianz’s decision has been communicated to parties in the property sector here, with the German company ceasing engagement on potential investments.
The decision does not impact on Allianz’s many existing investments in the Irish market, including its 50 per cent ownership of the Dundrum Town Centre.
In a statement a spokesman for Allianz Real Estate said: “Allianz has made a number of real estate investments previously in Ireland, with the transactions sourced, executed and managed by Allianz Real Estate.
“Allianz continues to be open to further real estate investment opportunities in Ireland across the different sectors, including residential, with Allianz Real Estate selectively screening opportunities on the group’s behalf. The screening takes in input from many parties including… the local insurance entity.”
Allianz’s decision comes amid increased Government intervention in the property market with moves on stamp duty and new rents caps in the pipeline.
According to Cushman & Wakefield, €1.5 billion was invested by institutions in 34 PRS deals in the first nine months of this year. These deals involved 700 existing housing units and 2,500 that were yet to be built.
Local and international investors have been attracted to the Irish rental sector by the strong returns on offer. According to figures for the second quarter from the Residential Tenancies Board, average rents here rose by an annual 7 per cent nationally to €1,352 and by 4.4 per cent year-on-year in Dublin to €1,848.