Transaction volume residential investment market reaches a record of 10 billion euros
1 december 2020
The low interest rate together with the confidence in the robust Dutch residential market which also proved stable during the corona crisis, have led to a new record in transaction volume of Dutch residential rental properties. According to Capital Value, the transaction volume is expected to reach 10.1 billion euros in 2020 which means a rise of 8.6% compared to last year. Despite this large amount of capital that finds its way to the residential investment market, there is great concern about the possibilities and the ability to finance new construction of residential rental properties in the Netherlands. Increased regulation of the residential (investment) market is not a stimulus for adding new homes. Only an increase in supply will lead to a more relaxed residential market in the Netherlands.
New record transaction volume
The upward trend in the transaction volume in the residential investment market is continuing and has been further reinforced by the corona crisis. The stability and relatively low risk associated with a residential investment product are being appreciated more and more by investors. In addition to the increased interest in these investment products, the increase of the transfer tax on residential investment properties from 2% to 8% in 2021 was also announced which caused many investors to make acquisition and divestment decisions earlier. Altogether this has led to an unprecedented high transaction volume in the Dutch residential investment market to an expected 10.1 billion euros, in which a total of approximately 43,400 homes changed hands.
Share of international investors remains considerable
Despite the uncertainties regarding economic growth and the travel restrictions that the corona crisis have brought, international investors continue to expand their positions in the Dutch residential investment market. In 2020, they acquired an estimated 3 billion euros in residential rental properties. This amount is lower than in 2019 when the transaction volume from international investors amounted to 4.2 billion euros. The was primarily the result of the acquisition of a large portfolio by Heimstaden (1.38 billion euros) in 2019. In 2020, there were no transactions as substantial as that one, which caused the percentage of international investors in the total transaction volume to decrease from 46% in 2019 to 30% in 2020. However, also this year a number of foreign investment funds entered the Dutch market again.
Continuing concerns regarding new-build output
Approximately 3.77 billion (37%) of the total transaction volume in rental homes was invested in new rental homes. Another 0.4 billion was invested in conversion and redevelopment projects, so that in the coming years, a total of approximately 17,000 new homes will be added to the housing stock. This led to approximately 1,000 more new-build homes being sold than in 2019, but this number was still around 3,000 fewer homes than in 2018. This development can also be seen in the number of building permits issued in the past years, which shows a similar fluctuation. Capital Value expects that around 60,000 building permits will be issued for new-build output in 2020, which means an increase of a few thousand permits compared to 2019. Developers even indicate that they want to apply for more permits in the last quarter, due to the imminent introduction of the BENG standard for new construction (i.e. NZEB: Nearly zero-energy buildings standard). In order to effectively address the housing shortage however, several more homes are needed: approximately 75,000 to 100,000 annually. 
Marijn Snijders, Director Capital Value, "We want to especially appeal to stakeholders to introduce stimulus measures in order to address the housing shortage instead of introducing new limitations. The corona crisis has shown that investors are prepared more than ever to invest in Dutch residential rental homes. Let's not waste this opportunity. Only more supply will lead to a lowering of prices."