Irish property funds: opportunities in 2025 and beyond

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 – 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 €55-60 billion. With €29 billion held by Irish investment funds, Irish funds comprise a key part of the Irish commercial real estate market.

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 €18 billion 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. 

Funding from investors can flow in a variety of ways including through pension funds or credit funds and Ireland's robust regulatory regime and tax landscape is an important factor for attracting investments through Irish regulated funds. In this context, it is worth knowing the options available when looking to invest in Irish real estate.

In this briefing, we provide the latest overview of the current Irish property funds market and key considerations for investors in 2025 and beyond.

Background to Irish property funds 

Irish property funds are funds which are authorised under Irish domestic legislation and invest 50% or more of their assets under management, directly or indirectly in Irish property assets. 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.

Ireland’s advantage 

Ireland benefits from a robust regulatory framework, a comprehensive network of fund service providers and a favourable tax regime. Ireland is seen as the gateway to Europe with Irish funds being distributed to more than 90 countries worldwide.

Assets under management of Irish domiciled funds reached €5 trillion at the end of 2024, with Ireland widely expected to become the largest fund domicile in Europe in the next few years. Irish domiciled funds experienced a remarkable 22% increase in assets in the past year, of which 42% is attributed to alternative funds.

The appeal of Irish structures for establishing property funds

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 an 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). The majority of Irish property funds are structured as ICAVs. One of the main attractions of the ICAV is its flexibility as it is suitable for a broad range of investment strategies, including real estate.

In addition, 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), a European long-term investment fund product that was substantially updated in 2024 (ELTIF 2.0), 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.

For further details on the L-QIAIF and the ELTIF please see our previous article on Loan origination and credit strategies with Irish structures.

All of these structures provide attractive options for investing in Irish property funds.

Key considerations for Irish property funds

To enhance the resilience of property funds, with broader benefits for macroeconomic and financial stability, the Central Bank in 2022 introduced a macroprudential framework for Irish property funds. Some of the key points of note specific to Irish property funds include:

• a leverage limit of 60% is imposed on Irish property funds on the ratio of the funds’ total debt to its total assets
• property funds should ensure there is alignment between the investment strategy, liquidity profile and redemption policy of the funds under management
• the Central Bank will not authorise property funds if they are not structured as (i) closed-ended or (ii) open-ended with limited liquidity as per the Central Bank’s AIF Rulebook. For Irish property funds that offer the ability to redeem, they must provide for a minimum redemption period of at least 12 months, taking into account the nature of the assets held
• where a QIAIF proposes to invest in Irish property a pre-submission to the Central Bank is required prior to the filing for authorisation being submitted
• depending on the investor strategy, certain fund structures can suit better than others, based on the nature of the underlying assets the level of investment and the nature of the target investors. It is important that investors structure their plans cost-effectively, tailored to suit their strategy and maximise returns

Tax considerations in Ireland 

In respect of additional tax considerations, the Finance Act 2016 introduced a tax regime for Irish real estate funds (IREF). A fund is considered an IREF and will fall within the IREF tax regime where 25% or more of the market value of its assets are derived from Irish land or buildings.

Where a fund is categorised as an IREF, 20% withholding tax will apply to distributions of income or gains and on gains on the redemption of units by the fund. Certain categories of investors will be exempt from the 20% withholding tax, for example certain types of pension funds. An entity-level income tax may apply also apply in limited circumstances, notably if the fund has excessive leverage or interest costs.

How Ogier can help

With a team of experienced investment funds and real estate experts in Ireland, Ogier is well-placed to provide seamless cross-border legal expertise to managers and institutional investors in Ireland, Europe and North America. Ogier's team in Ireland has extensive experience advising commercial and retail property clients, including national and international clients on their expansion into Ireland.

For more information about our Investment Funds and Real Estate services, contact one of our dedicated team members below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice