Americans, Germans and Brits interested in Dutch rented housing

Interest among international investors in purchasing rented housing in the Netherlands has skyrocketed, according to a study by Capital Value that was presented at the Dutch Embassy in London today. More than 35 of the key investors from the US, the UK, Germany and the Middle East attended the presentation that was organised in collaboration with the Dutch Ministry of the Interior and Kingdom Relations (view impression of the event).

As part of this research, over 200 international real estate investors based in North America, Asia, the Middle East and Europe who operate in the European real estate market were approached. Of these investors, 168 have already made cross-border investments in European residential real estate or are investigating this option. Between them, they hold 276 billion euros of capital investments, more than 28 billion euros of which are invested in housing. For the study, interviews were held in London, New York, Frankfurt, Munich and elsewhere.

International interest growing
Of the investors surveyed, 23% are interested in purchasing Dutch rented housing. The international interest in the Dutch housing investment market is a new development. Over the past few decades, this Dutch market was fully dominated by Dutch investors. Of the foreign investors intending to invest in the Netherlands, 29% are actively pursuing purchases, and 25% of them are already evaluating portfolios. The first large transactions are expected to take place in the near future.

Netherlands ranked third
In contrast to just a few years ago, when cross-border investments in rented housing were primarily restricted to the German market, investors are now increasingly turning their attention to other countries. Over the past two years, large cross-border transactions took place in the United Kingdom and Scandinavia, with Denmark proving particularly popular. That popularity now seems to have shifted to the Netherlands.

The abovementioned research reveals that the Netherlands holds a solid third place - after Germany and Scandinavia - in a list of European countries, where international investors are considering investing in the coming years. Investors see extra potential in the Netherlands due to the decline in the purchase prices of homes and the expectation that the market will start improving again.

A.J. (Alexander) van der Laan, Capital Value real estate advisor based in London: "Many investors compare the Netherlands with Germany in the early 2000s. Due to the huge rise in prices in Germany over the past few years, investors are now recognising that better returns can now be realised in the Netherlands. Increasing numbers of foreign parties see opportunities in the housing shortages that are threatening to hit the Dutch housing market and the high risk-return profile".

Apartments the favourite
The investors have a preference for buying apartment complexes, on the basis that they expect the management and maintenance costs to be lower and the fact that, according to demographic forecasts, there will be a massive increase in the number of single-person households. Of the investors, 63% are also interested in acquiring single-family residences, while 91% say they would prefer to acquire existing complexes. Apartment complexes yield a direct return and have the advantage that information on their position in the market is already available. Specialised housing attracts little interest. A small number of the investors surveyed expressed a specific interest in student accommodation with long-term tenancy contracts.

Preference for housing with mid-priced rents
International investors are primarily interested in rented homes for which the monthly rent lies between €700 and €1,000, as the housing shortages in this segment are expected to worsen. A number of private equity investors have said that they are interested in investing in rented public housing.

Volumes upwards of 50 million euros
In 2014 international investors expect to invest as much as 1 billion euros in Dutch rented housing. Similar sums have been mentioned in respect of the coming years too. In fact, if sufficient properties are available, this figure may end up being even higher, as investors have large amounts of capital at their disposal for investments. There is particular interest in high-volume transactions of 50 million euros or more. The number of transactions that feature international players is expected to increase substantially in the coming years.

M.A. (Marijn) Snijders, Managing Director at Capital Value, registered valuer (RT), Member of the Royal Institution of Chartered Surveyors (MRICS) "We view the foreign investors' very keen interest as extremely positive. These parties complement the Dutch institutional and private housing investors. And as the housing associations will now be permitted to sell housing more in the form of entire complexes, the housing available will continue to increase. Foreign capital can make a positive contribution to the development of the mid-priced segment of the rental market".

PropertyEU, January 22nd 2014: International investors target Dutch rental housing
Property Investor Europe, February 2nd, 2014: Foreign investor interest in Dutch rented housing surges - advisor