Fuelled by the Irish government’s initiatives to incentivise international capital to invest in Irish real estate and a supportive regulatory environment, Ireland’s property funds market is poised for continued growth in 2025 – and fund managers are watching with interest.
The Irish property funds sector has experienced notable growth in recent years, with increasing demand for residential and commercial properties.
According to the Department of Finance’s Funds Sector 2030 Report, the value of professionally managed commercial real estate is in the range of €55-60b. With €29bn held by Irish investment funds, Irish funds comprise a key part of the Irish commercial real estate market.
Incentives
Under its Programme for Government 2025, Ireland has outlined a progressive agenda for housing, construction and the environment, including a target of 300,000 new homes by 2030. It’s estimated that there will need to be more than €18bn of fresh international capital (direct and indirect) to help support these targets over the next four years.
As a result, the Irish government is expected to roll out initiatives in the coming months that are designed to incentivise international capital investment in Irish real estate.
These are anticipated to impact the funds industry by creating new investment opportunities in construction, infrastructure and real estate. These opportunities are expected to substantially contribute to the delivery of the government’s new home delivery targets.
Structuring Options
A key feature of the property fund sector in Ireland is the prominence of single investor property funds.
Investors in Irish property funds include pension funds, sovereign wealth funds, high-net-worth individuals and insurance firms. The majority of these are pension funds and insurance firms, with 41% of investors in Irish property funds comprising of pension funds at the end of 2023.
Pension funds and other long-term investors are attracted to Irish real estate owing to strong economic and demographic factors and a stable political and regulatory environment.
Structuring optionality is an important component of the real estate fund landscape too. Irish property funds are typically established as Qualifying Investor Alternative Investment Funds (QIAIFs). A QIAIF is an alternative investment fund subject to the requirements of the Alternative Investment Fund Managers Directive (AIFMD) and the Central Bank of Ireland’s (the Central Bank) AIF Rulebook. The QIAIF is required to be authorised by the Central Bank.
The QIAIF is available to professional and institutional investors that meet the criteria of ”Qualifying Investors”. In accordance with the AIFMD an alternative investment fund manager (AIFM) is required to be appointed to the QIAIF. A QIAIF which has appointed a European Economic Area (EEA) domiciled AIFM may avail of the pan-EEA marketing passport.
The most frequently used structures for Irish property fund QIAIFs are the Irish Collective Asset management Vehicle (ICAV) – a corporate structure tailored specifically for investment funds – or the Irish Investment Limited Partnership (ILP).
There are a number of other alternative fund structuring options that may be used for investment in Irish property. These include the European Long Term Investment Fund (the ELTIF), which was substantially updated in 2024 (ELTIF 2.0) and which can be sold widely across the EU under a pan-European marketing passport. Uniquely, for a semi-liquid or illiquid fund, it may be sold widely to retail investors throughout Europe.
ELTIF 2.0 prescribes what assets are eligible for investment and this includes real estate assets. The revised ELTIF regulation is also a helpful development to support investment in Irish real estate and has the potential to provide a new source of finance for real estate.
There is also a use case for Loan-QIAIFs (L-QIAIFs) in the context of real estate funds with L-QIAIFs being utilised as a fund structure to facilitate lending to developers. The current L-QIAIF regime will soon be replaced in full by the new pan-European AIFMD II loan origination regime (to be implemented by April 2026). The European harmonisation is expected to significantly enhance the attractiveness of Irish fund structures, including enhancing investments in Irish property funds.
Overall, the combination of government incentives to attract international capital and a progressive and supportive regulatory environment means that, as we look to 2025 and beyond, Ireland’s property funds market looks set to continue to grow at pace.
