Increasing appetite foreign investors residential market
While the owner-occupier market is showing the first signs of recovery, the residential investment market is strongly influenced by the landlord levy, according to the most recent The Netherlands Residential MarketView of real estate adviser CBRE.
The levy is leading to a depreciation of regulated rental units and ensures that commercial investors are turning their focus almost entirely to the unregulated market segment.
The narrowing gap between vacant possession value and operating value is causing residential investments to increasingly behave as commercial properties. The current focus is on stable cash flows, which is creating a growing gap between core and non-core property. Core-oriented institutional investors are now focusing almost entirely on new construction schemes in the strongest regions. In other submarkets, it is private investors who set the tone. There is still a lot of interest from foreign parties, but to date they have not found direct market access. German banks, however, are increasingly active on the Dutch market, where they are involved in an increasing number of (re)financing transactions.
New supply of core assets is formed by an increasing volume of new developments in the lower unregulated rental segments, particularly in the western “Randstad” area. Especially Amsterdam is witnessing a striking number of these development schemes, often at prominent business locations such as Zuidas Amsterdam and the Amstel railway station.
Although the market for residential investment has been triggered by policy changes, many regulatory obstacles still remain. The landlord levy in particular proves to be a market disturbance, which has caused a historically high rent increase this year. Uncertainty about future regulatory changes - or the reversal of measures already taken – is creating uncertainty and reluctance among market parties.