Historical investment volume of more than 4 billion euros in Dutch rental housing

Marijn Snijders, Director of Capital Value: “Dutch pension funds are the main driving force as regards the development of new rental housing in the medium-priced rental segment. It’s nice to see how the Dutch pension funds have fulfilled this role over the past year and that so much pension fund money is being invested in the construction of medium-priced rental housing. This is essential to further reduce the shortages and we expect this trend to continue in 2017. We also hope that investors, corporations, the government and the construction industry will intensify their cooperation now there are so many opportunities.”

From the Capital Value research, it appears that private investors mainly invested in existing premises in 2016. Yet we are also seeing increasing activity among private investors in new-build and redevelopment projects. In addition, private investors are showing more interest in larger projects of between 5 and 10 million euros. International investors remained very active in the Dutch market in 2016, especially in the expansion of existing portfolios. Meanwhile, new international parties also entered the Dutch market in 2016.

Kees van Harten, Director at Capital Value: ”We are seeing a trend that more and more foreign investors and new Dutch investors are entering the residential investment market, partly due to low interest rates, the growth in the number of households and an attractive risk-return profile. Due to increasing demand and the availability of capital, prices continued to rise in 2016. Investors therefore wield lower initial yields for new investments. We are also seeing that the value of existing portfolios of investors and corporations have increased thanks to the improvement in the housing market.”

Earlier Capital Value studies confirm that the pressure on the Dutch rental market remains as high as ever. At the same time, research among the large property investors reveals that there is a record budget for investments in Dutch rental housing. The available capital can be used to build new private sector rental housing, but also provide additional funds for corporations to build affordable social housing. Recently, as a result of the new Housing Act, a number of housing associations sold more expensive property to pension funds and used the proceeds to enable the construction of cheap housing. This trend will also continue in 2017, according to Capital Value researchers.