Transaction volume residential investments reduced by half in first six months of 2021
14 juli 2021
Over the first six months of 2021, a total of 2.24 billion euros in rental homes was sold. This can be shown from research by Capital Value. Compared to 2020, this figure is half of what it was over the same period last year, when the transaction volume resulted in 4.77 billion euros. What is interesting is that the market recovered dramatically in the second quarter compared to the first quarter when the transaction volume only amounted to 600 million euros. Approx. 58% of the volume in first half year was realised in new-build output, a stark rise compared to that percentage in the previous year (it was then only 34%). According to Capital Value, pension funds will invest even more in the new construction of affordable rental homes and also more existing supply is expected to enter the market over the next half year.
Less supply due to a rise in the transfer tax, prices of existing portfolios remain stable
Over the first half of this year, pension funds were less active in selling their existing properties (7%). This can be explained by the fact that pension funds sold a great deal in the final quarter of 2020 in anticipation of the increase in the transfer tax from 2% to 8%. The effect of the increase in the transfer tax appears to be negligible on prices in the higher segment. In recent transactions of residential portfolios, it was apparent that investors are willing to make offers at the same levels as in 2020. This can be attributed to the enormous amount of available capital, the low interest rate, the rise in the price of homes in the Netherlands, and the limited supply of existing residential portfolios.
Pension funds largest buyers of new-build output
Developers were the largest sellers of rental homes over the first six months of this year with a 63% share of the total transaction volume. Pension funds remain the largest buyers of new-build output. The percentage of institutional buyers in the total transaction volume skyrocketed to 52%, while this was only 43% in 2020. Increasingly more international pension funds are expressing interest in investing in Dutch rental homes.
More investment in new-build output expected in the second half of 2021
Dutch institutional investors have for years played an important role in stimulating new-build output in the Netherlands. It is expected that they will remain active in the acquisition of new rental homes during the second half of 2021. More transactions of newly-built rental homes will also be realised with foreign pension funds in the next six months. Homes in the mid-market rental segment are especially popular.
Marijn Snijders, Director Capital Value, "There is still a record amount of capital available for investment in new rental homes. In order to make maximum use of this capital, we must jointly ensure that there is sufficient suitable supply available in the near future. It is good news that the number of building permits is rising, however, the possible expansion of national legislation, the shortage of capacity in municipalities, and increasing construction costs can have negative consequences on supply. It is a missed opportunity if we don't use this moment now to build more affordable rental homes and relieve the pressure on the housing market."