Institutional Investment and Residential Rental Market Dynamics

Barra McCarthy
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Barra McCarthy: Central Bank of Ireland

No 1/RT/24, Research Technical Papers from Central Bank of Ireland

Abstract: The impact of institutional investment on residential rental markets is a topic that draws much attention, but for which limited evidence exists. This paper aims to remedy this by analysing the direct and indirect impact of institutional investment in existing housing stock on residential rents at the property level, using Ireland as a case study. Ireland is particularly suited, as large portfolios of rental properties became available for purchase due to the Global Financial Crisis (GFC), enticing institutional investors into Ireland's rental market for the first time. By focusing on investment in existing stock, the analysis isolates the impact of institutional investment from the effect it can have on local rental markets when it is channelled to new rental housing – a supply effect which should reduce rents. The study finds that institutional investors increased the level of rents by 4.1 percentage points more than other landlords with comparable properties following purchase. Available evidence supports many different causal mechanisms, including bargaining power, institutional landlords providing a higher cost-higher quality service, and institutional landlords placing greater emphasis on profitability.

Keywords: Institutional Investment; Residential Rental Markets; Spatial Data. (search for similar items in EconPapers)
JEL-codes: G23 R30 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-ifn and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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