In 2013 approx € 2 billion available for residential real estate
11 februari 2013
In the coming years, housing production will reach a historic low. Compared to 2009 when approximately 80,000 homes were built, a historic low of about 35,000 homes will be produced in 2013 and 2014. If the falling housing production trend does not reverse and the growth of the number of households continues, by 2020 the housing shortfall in the Netherlands will rise to an average of about 4% (300,000 homes) with peaks in certain regions reaching approximately 7%. However, this situation presents opportunities. Investors have made about €2 billion available in 2013.
This is the conclusion of Capital Value, a specialist and market leader in the field of housing investments in the Netherlands, following a survey of 150 housing associations and the 50 largest housing investors in the Netherlands and a supplementary study commissioned by Capital Value and ABN AMRO Bank and conducted by ABF Research in order to gain a view of the future of the housing market up to the year 2020. The results were presented during Capital Value's annual meeting, held in Utrecht, the Netherlands.
Possible 'new' housing shortage in the Netherlands; statistical shortfalls can reach as much as 2% to 4% (300,000 homes)
According to Managing Director of Capital Value, Marijn Snijders, "A fall in production to 35,000 homes in 2013 and 2014 compared to the figures from just five years ago represents a substantial drop. Even in 1948, 38,000 homes were built."
ABF Research examined the impact of such a decline in combination with other factors, including the forecast growth in the number of households. This revealed a statistical increase in the housing shortfall from 2% in 2012 to 4%, which is equivalent to 300,000 homes, by 2020. This far exceeds the previously acceptable level of 1% or 2%. If the shortfall increases as sharply as now seems apparent, there will be a 'new' housing shortage. 'New' in the sense that the 'new' housing shortage, despite similar absolute numbers, cannot be compared to the appalling circumstances faced in the 1950s and 1960s. The shortfall will be most apparent in the west of the Netherlands.
According to Marijn Snijders, "Measures are required to address the shortfalls. For instance, a more market-oriented approach will have to be taken to new housing, in both quantitative and qualitative terms, than in the past. A sufficient amount of appropriate housing is vital for the healthy economic growth of a number of urban regions. Institutional investors in particular can play a role in the construction of new rented housing."
In 2013, approximately €2 billion will be made available for the purchase of rented housing
The investors surveyed were positive about the Dutch rented housing market. The low rate of vacancy, the positive trend in rents, the inflation-resistant character, the growth in the number of households and population growth, the building production and the distribution of default risk all play a significant role in this. Investors indicated that a total of approximately €2 billion will be made available for the purchase of rented housing in 2013. This represents a substantial increase in investment compared to recent years. Institutional investors have indicated a willingness to invest approximately €1 billion, preferably in new housing. Private investors potentially want to invest €900 million to €1 billion, but are primarily interested in existing rented housing. Rented housing in the mid-price segment is favoured given the growing demand for this type of housing.
Investors can assist housing associations
According to Managing Director of Capital Value, Kees van Harten, "Eighty percent of private investors and 50% of institutional investors are interested in acquiring housing association homes. This means that a significant part of the total available investment volume can be used to acquire these types of homes. A growing number of housing associations, namely 54%, have also indicated their intention to sell rented housing as part of entire complexes due to the deteriorating financial situation, as rent increases and individual sales are no longer adequate. Investors can assist housing associations to make new investments a reality."
Regulations a roadblock for housing associations
Of the housing associations surveyed, 64% indicate that regulatory easing is required to facilitate the managed sale of complexes in their entirety. The conditions established for the sale of housing complexes in their entirety by the ministerial circular (MG 2011-04) currently in effect are not in line with market conditions. This point has been confirmed by a large number of the investors surveyed.
Unequivocal government policy a requirement
The current uncertainty arising from the debate of the landlord levy and uncertainty about rent increases can negatively impact the investment climate. Clarity on these points in the near term is essential for housing investors in the Netherlands and abroad.
Major opportunities for foreign banks and investors
According to Kees van Harten, "The predicted shortfalls in the Netherlands can offer a good foundation for investments in rented housing. To attract foreign capital to the Netherlands, this message will have to be clearly positioned. References are made too emphatically to the high levels of mortgage debt alone. However, the current market also offers major opportunities for foreign banks and investors."
According to Marijn Snijders, "As regards new housing, whether the total investment volume of €2 billion will actually be invested in 2013 depends on the willingness of developers and municipal authorities to adjust land prices to facilitate the construction of housing for the mid-price rented housing segment. We recommend engaging investors at an earlier stage of the development of plans to better coordinate demand and supply. As regards the sale of properties in the hands of housing associations, it will largely depend on the regulatory easing required to make their sale possible.
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