7.7 billion euros invested in Dutch residential market in 2022

22 december 2022

The Dutch residential investment market's total transaction volume will amount to approximately €7.7 billion in 2022. This constitutes a growth of 6.5% compared to 2021, when the transaction volume reached €7.2 billion. This became apparent from an analysis conducted by Capital Value. A significant share of the volume (23%) consisted of transactions conducted by housing associations, which purchased €1.77 billion's worth of rental homes. A large share of these homes were purchased from fellow associations. A concerning development is that the sale of new-build rental homes fell by 19% compared to 2021, and by no less than 36% compared to 2020. A total of 11,400 new-build rental homes, to be completed in the coming years, were purchased in 2022. This falls far short of the numbers required to reduce the housing shortage in the Netherlands. 

Dutch residential investment market holding up in fourth quarter
Due to the evolving market conditions – the high inflation rate, the elevated capital market interest rate, and the announced regulation of the mid-priced rental segment, to name a few factors – many feared that the fourth quarter would yield a low transaction volume. However, a total of €1.8 billion's worth of rental homes were sold in the fourth quarter, a similar transaction volume to the first and third quarters of this year.

Housing associations play important role
Housing associations contributed significantly towards the total transaction volume; with the landlord levy slated for abolition, housing associations have more financial options. Much is expected of housing associations as regards to the creation of new regulated rental homes. In that context, 38% of the €1.77 billion that associations invested in rental homes – approximately €660 million – was invested in regulated rental homes (new build as well as conversions). The remainder, approximately €1 billion, was used to purchase existing homes, many of which were purchased from other housing associations. More than €1 billion's worth of the purchases made by housing associations involved another housing association as the selling party.

Concerns about new-build output of affordable rental homes; reduction of 19% relative to 2021
Despite the respectable transaction volume realised in 2022, there remain great concerns as regards the required investments in new-build rental homes. As a result of the ballooning construction costs, the rising capital market interest rate and the announced regulation of the mid-priced rental segment, many investors held off on investments in new-build homes for the time being. The proportion of newly built rental homes in the total transaction volume fell to 40%, compared to 55% in the previous year. The investments made in 2022 will provide for the construction of 11,400 new rental homes in the coming years – a reduction of 19% compared to 2021 and 36% compared to 2020. This does not even come close to enough to reduce the housing shortage. Both Dutch and international institutional investors are increasingly incapable of acquiring projects because the increased interest rate causes corresponding increases in purchase prices. As a result, more and more projects are becoming unfeasible.

Marijn Snijders, managing director at Capital Value: "We are deeply concerned about the new-build output in 2023-2024. If incentivising measures are not taken, the output of affordable homes will drastically diminish in the coming years. We previously already called for the reintroduction of the so-called Van der Laan subsidy scheme or a VAT reduction for the construction of affordable rental homes. Such measures could help ensure that more affordable rental homes can be built in the coming years."

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