Dutch residential investment market is breaking all records

11 December 2018

Dutch residential market is breaking all records

National and international investors are showing a greater interest in rental housing than ever before. Recent research by Capital Value has indicated that in 2018 a total of approximately 46,000 rental properties were sold with a value of 8.5 billion euros, which is a growth of 63% compared to the residential investment volume in The Netherlands in 2017. Previously, Capital Value had already observed international investors to have an unparalleled interest in Dutch rental housing.

Dutch residential investment market is breaking all records
Since 2014, investments in rental housing have increased enormously in The Netherlands and the residential investment market has grown from approximately 3 billion euros in 2014 to 8.5 billion euros in 2018. Rental homes have thus become one of the largest categories on the Dutch property investment market which is reflected by the high number of large transactions: 18 portfolios worth over 100 million euros were sold in 2018.

It is not only the interest in regular rental housing that has grown; also care homes and student housing are subject to investments more often than ever before. In particular, the volume of investments in care homes has grown considerably from 300 million euros in mid-2018 to almost 1 billion euros at the end of this year. After the record year 2017, in which more than 700 million euros were invested in healthcare real estate, investments have again increased by 35% and care homes now account for 11% of the residential investment market. The interest in student housing is also considerable in 2018: with 734 million euros, the investment volume in this segment represents 9% of the entire residential investment market.

Thijs Konijnendijk, Head of Research at Capital Value, says: "We consider it very good news that these special categories are subject to investments more and more often. This is essential, especially for starters in the housing market and the elderly, in order to maintain the household mobility. Unfortunately, over the last few years development projects have been neglecting these target groups."  

Capital needed to reduce shortages
Currently it is attractive to invest in rental housing, partly due to the scarcity of housing in The Netherlands. The growth of capital on the residential investment market is necessary to contribute to reducing housing shortages. In 2018 a substantial investment was made in new residential development projects: 41% of the residential investment volume, approximately 3.5 billion euros, were invested in new construction projects or transformations, resulting in the addition of approximately 19,000 new rental properties to the Dutch housing stock. However, previous research by Capital Value has shown that this volume is not yet sufficient to reduce the shortages in the rental sector, which is also confirmed by the number of building permits that lags behind the ambition of the National Housing Agenda. According to the Dutch statistical authority (CBS) 49,000 building permits were issued in the first three quarters of this year, while the target (for the entire year) was 75,000. The forecast is that possibly no more than 65,000 permits are issued. 

Number of investors is growing and housing associations are more active as well
In addition to the increase in the number of international investors, the number of Dutch investors is growing, especially in the private sector. It mainly concerns wealthy investors who start to invest in housing after having sold their own company. In 2018 1.7 billion euros were invested by private investors. Corporations were also more actively investing in new social rented housing in 2018.
Marijn Snijders, Director of Capital Value, says: "For the years ahead it is essential that the capital available is used to eliminate the shortages. There is a lot of room for housing associations and investors to build on their co-operation. Builders, developers and municipalities will have to speed up processes and continue to produce innovatively. It is of great importance to not only pay attention to quantity, but also –and more so-  to quality in general and to the target group."

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