Transaction volume Dutch residential market rises to 6.8 billion euro in 2024
With 1.6 billion euro invested in rental properties during the fourth quarter of 2024, the overall transaction volume for the year experienced a substantial 59% growth compared to 2023. In total, some 28,500 properties were sold, with domestic investors accounting for the majority (85%) of these transactions. While international investors represented approximately 30% of the total investment volume in previous years, their share has been halved in 2024. Housing associations emerged as the second largest buyer group, contributing 2.3 billion euro or 33% of the total transaction volume. Private investors, who primarily acquired existing properties from institutional investors, constituted the largest group with a 40% share. It is anticipated that private investors will gradually privatise a part of these properties in the coming years. The sale of existing properties enables institutional investors to allocate more capital towards the development of new affordable rental housing.
Institutional investors and housing associations are the largest investors in new-build
New-build rental properties accounted for 45% of the total transaction volume, representing 3 billion euro. These investments have the potential to facilitate the construction of approximately 12,000 new rental units in the coming years. The transaction volume in new-build increased by 25%. Housing associations emerged as the primary investors in new-build projects, contributing 1.46 billion euro, which is sufficient to construct around 6,900 affordable rental homes. These figures do not include investments in housing associations’ own projects, such as redevelopments or expansion within their existing stock. Institutional investors followed closely, allocating 1.3 billion euro for the development of approximately 4,500 homes. While both housing associations and institutional investors increased their investments by 52% and 32% respectively compared to the previous year, these levels remain insufficient to meet the targets set by the government. Housing associations have pledged to build 25,000 units annually, while institutional investors have agreed to aim for 10,000 units per year. A notable absence in new-build investments is that of international investors, whose share has decreased to a mere 2% in 2024, a significant decrease compared to the 25% average over the past five years.
More capital available to realise new-build homes
Institutional investors are increasingly selling homes from their existing property portfolios, creating greater investment opportunities for new-build developments. Combined with the growing number of commitments from various pension funds, there is sufficient institutional capital available in the coming years to deliver more than the desired 10,000 new rental units annually. However, additional measures are required to fully capitalise on this opportunity. Arjan Peerboom, Director of Capital Value, states: ‘It would be a missed opportunity if we do not take advantage of the substantial funds that pension funds and housing associations are eager to invest in new rental properties in 2025-2026. Investors, housing associations and the government must take all necessary steps to stimulate construction, especially given the slower-than-expected growth in building permits.
Concerns about the size of the rental stock due to privatisation
Given current market trends, there is a risk that the rental stock in the Netherlands will decline over the next two to three years. Insufficient investment in new-build rental properties, coupled with an increasing number of investors adopting a privatisation strategy for existing rental properties, is contributing to this risk. Both existing portfolios and recent acquisitions of existing properties are increasingly subject to privatisation strategies, leading to a gradual decrease in the rental stock over time. The full impact of this trend will become apparent with a delay as tenants vacate these properties. It is therefore essential to strengthen support for the construction of affordable housing to maintain the rental stock at adequate levels.”
Thijs Konijnendijk, Head of Research & Data Intelligence at Capital Value, states: “Given the risk of a declining rental stock in the coming years, the investment climate must be improved to stimulate the construction of affordable rental housing in the Netherlands. Investments from both national and international institutional investors are crucial for new-build projects, but these remain insufficient. Additional measures such as lower transfer taxes, shorter and simpler permitting procedures, and the integration of local and national regulations regarding rent control and sustainability are therefore essential. The current regulatory complexity must be addressed.”
