Ires Reit, Ireland’s largest residential landlord, has found itself in a precarious position as it ranks as the most unloved stock on the country’s main stock index, the Iseq 20. Despite a strong start in 2021, the company’s share price took a plunge due to the rising interest rates and the uncertainty caused by the pandemic. The company is now dealing with the fallout of dwindling investor confidence, while also facing increased regulatory scrutiny. This article will examine the challenges Ires Reit is facing in the current economic climate, and what it means for the future of the sector.
The Society of Chartered Surveyors Ireland (SCSI) reports that two out of every five property sales in the final quarter of 2022 were due to Irish landlords leaving the market in response to stricter rent controls, taxes, and rising interest rates. The exodus has affected Ires Reit, the largest residential landlord in the country, causing its shares to fall by 38% over the past year. Despite a rising occupancy rate, the average rent across Ires Reit’s portfolio is 11% below that of newly listed properties. The company’s net tangible assets have also fallen by 4.4% to €1.59 ($1.76) per share, and it has written down the value of its investment properties by €45.6m ($50.8m). Meanwhile, Germany’s Vonovia, another large residential landlord, has suffered allegations of corruption amongst its employees. Minister for Finance Michael McGrath has put investment regimes surrounding Real-Estate Investment Trusts (REITs) under review.
In conclusion, Ires Reit’s recent dip in performance and popularity is a clear reflection of the impact of rising interest rates on the real estate market. While the stock may be facing a period of unpopularity, it is worth noting that this is not a unique situation, as many other property-focused companies are also experiencing similar challenges. Only time will tell if Ires Reit can navigate these choppy waters and regain the favor of investors, but one thing is certain – keeping a close eye on fluctuations in interest rates will be key to success in this sector.
