Research: Growing interest in new-build rental housing in the Netherlands
13 January 2016
Interest among international investors in the Dutch residential market remains high. Foreign investors indicate that they have over 3 billion euros available to invest in Dutch rental housing in 2016. There has been a striking increase in the amount of interest in new-build projects, partly due to the lack of sizable existing residential portfolios. These are just some of the results of a survey of international investors conducted annually by Capital Value. This year’s survey was sent to more than 50 international investors who are actively looking for Dutch rental housing.
The Netherlands remains an attractive market for international investors
The role of foreign investors in the Dutch housing market has increased considerably. While very few foreign investors were active in 2013, substantial investments were made in 2014 and 2015. With around 800 million euros in direct investments in 2015, international investors were responsible for approximately 26% of the total investment volume of around 3 billion euros. They also made approximately 600 million euros in indirect investments. In fact, the foreign funds had hoped to invest more in 2015, but there was insufficient supply.
More than 3 billion euros available for 2016
It is clear that interest among investors remains high, given the capital they have available for 2016. The investors surveyed indicated that they have approximately 3.1 billion euros available to invest in Dutch rental housing in 2016. These are both investors who have already acquired rental housing as well as new investors wishing to enter the Dutch market. Due to the growing demand for rental housing, the worsening shortage and the upturn in the residential market, international investors can see opportunities to achieve stable returns on Dutch residential portfolios, especially when considered in a European context.
Noticeable increase in interest in new-build
74% of the international investors expressed a desire to invest in new-build rental housing. This is a noticeable increase compared to last year, when the equivalent figure was ‘only’ 32%. The increasing interest can be explained by the lack of existing portfolios and the continually growing demand for rental housing in many regions of the Netherlands. New-build rental housing is generally considered a good-quality, sustainable investment. 2015 saw the first investments in new build (by an American and a German investor, among others).
80% of the foreign investors invest on behalf of institutional clients
The majority of the investors (80%) said they invest using capital from pension funds and insurance companies. These are increasingly long-term investors with an investment horizon of over 10 years. The investors come from the United States (31%), the United Kingdom (28%) and Germany (25%).
Increased cooperation with Dutch organisations and municipalities
Approximately 42% of the investors work with a Dutch partner who provides the local expertise. Another 32% indicated a desire to build their own organisation with Dutch employees.
The investors are mainly positive about the rule changes implemented by the Dutch government. They added, however, that strategic cooperation with municipal authorities requires attention. In a number of cases, the role of the municipal authorities caused delays in acquiring housing association properties.
According to Capital Value Managing Director, Marijn Snijders, “Foreign investors continue to play an important role in the Dutch residential investment market. Due to the increasing interest in acquiring new build, they can play an important role in reducing market shortages. Last year we saw several good examples of this, where foreign investors were a useful complement to their Dutch counterparts.”
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