Funding / Real Estate
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An alternative solution for commercial borrowing in Ireland

22 Jun 2023

At Octopus Real Estate (ORE), we’re excited to familiarise you with the unique perspective we bring to commercial lending in Ireland. But before we dive into the specifics, let’s examine the economic landscape of the Emerald Isle.

Ireland’s strong economic backdrop

The Republic of Ireland boasts a strong real economy, and there are plenty of reasons to be optimistic in the region. Unemployment remains impressively low at around 4.3%, and GDP has been performing well, outshining the rest of Europe with 13.6% growth in 2021 and 12.2% in 2022, with the 10-year average sitting at 9.1%.

In the year ahead, Ireland is poised to continue its strong economic performance, with the European Commission estimating GDP growth of 3.2%, compared to an EU average of 0.3%.

On top of that, Ireland is also enjoying the fruits of a falling debt burden. Debt to GDP has dropped to a modest 59.0%, a remarkable achievement considering it was well over 100% just two short years ago (by the way, the UK is currently sitting at 80.7%).

Market pressures affecting commercial real estate

Despite this optimistic backdrop, Ireland shares some familiar financial headwinds with the rest of Europe; inflation and the ongoing conflict in Ukraine have created a sense of uncertainty.

The European Central Bank has responded by raising interest rates regularly since the middle of last year. Naturally, these rising debt costs have cast their shadow on the commercial real estate market, presenting some challenges.

In 2023, many investors and lenders are treading carefully, including the high-street banks that have been exercising prudence in Ireland for some time now. This “wait and see” approach often leaves borrowers struggling to secure the support they need to finance their projects, especially those with unique requirements like half-completed developments or land with planning consent.

To add to the pressure on borrowers, the loan-to-value ratios (LTVs) at which lenders are prepared to lend have continued to drop off. This has contributed to a tendency for banks to lend only to the most prime assets, leaving even more borrowers without a suitable solution.

But there’s still hope – we have James Nunn, Senior Investment Manager, ready to shed some light on the situation:

“Although commercial real estate borrowers may be facing funding challenges at the moment, opportunities exist for them to secure loans through alternative lenders who possess discretionary capital and a nimbler approach. And let’s not forget that lenders can also reap the benefits. Given the established underlying economy, numerous sectors within the Irish market still offer robust security.”

James Nunn, Senior Investment Manager

Support available for borrowers

Even though there are challenges in the market, there’s still support available for borrowers, especially through non-bank lenders such as Octopus Real Estate (ORE).

As one of the most established non-bank lenders in the UK, Octopus is widely recognised as a leading provider of short-term property finance. Since our inception in 2009, we’ve lent over £6.2 billion, and now we’re honoured that we’re able to bring this same dedication to the esteemed Irish market.

We offer funding across all commercial asset classes, including land with planning consent for residential, hotel, and student housing developments.

Our experienced Commercial Lending team knows that one size doesn’t fit all. We structure every loan to meet individual needs and deadlines, offering bespoke solutions with certainty. And to ensure prompt service, we collaborate with local professional teams, including lawyers, valuers, and quantity surveyors. Speed and efficiency are the name of the game.

Curious to learn more about how Octopus Real Estate can support you? Look no further.

Contact our team today here. We can’t wait to hear from you.

Now, let’s dive into a case study that exemplifies our commitment to empowering borrowers in the Irish market.

Case study: Funding the James Street hotel – land with planning for 145 bedrooms

Where: James Street, Dublin

What: Site finance – 12-month term – 65% LTV

When: May 2022

Imagine James Street in Dublin – a vibrant location with boundless potential. In May 2022, Octopus Real Estate provided site finance for a 0.44-acre freehold site on James Street. This real estate boasts planning consent for a 145-bedroom aparthotel. An international hotel operator has already inked a lease agreement for this exciting venture, scheduled to be completed in 2025. Situated opposite the new children’s hospital development, this hotel will not only enhance the surrounding area but also help meet the pressing demand for accommodation.

Contact our team to find out how we can support your lending needs in Ireland


Lending in Ireland

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