Irish real estate funds (Irefs) have been placed on watch by the Central Bank of Ireland amid concerns that an investor exodus could trigger a liquidity crisis, forcing a fire sale of commercial real estate into a market where values are already under pressure because of the coronavirus crisis.
The financial watchdog is also concerned that a property crash could cause some funds to breach the terms of their loan agreements, putting more than €6.5bn at risk in a worst-case scenario.
A deep-dive survey of the sector ordered by Gabriel Makhlouf, shortly after becoming the Central Bank governor last year, shows that global investment funds own €23bn of Irish property — more than 40% of the national stock of commercial real estate.
These funds typically