Very strong growth in residential investment

The Dutch investment market for “multifamily” residential property has seen an enormous growth in the past six months through the large-scale entry of foreign buyers and steady growth in the number of financiers. This is concluded from the latest MarketView on the Dutch residential market of real estate adviser CBRE.

The Dutch housing market has undeniably entered the recovery phase, but this recovery is very uneven and concentrated mainly in the northern part of the “Randstad” conurbation, around the cities of Amsterdam and Utrecht. In a response to the tight market conditions in that region, new developments and transformations aimed at the mid-segment of the unregulated rental market are being started, especially in Amsterdam. These schemes are nearly all situated on the edge of the inner city at multi-functional living/working locations, an indication of the further intertwining of living, working, retail and leisure in the Netherlands.

An important trigger is also provided by government intervention in the market. Income-dependent rent increases have both in 2014 and in 2013 led to an average annual rent increase of more than 4%, and the recent proposal to make property tax values a factor in the determination of the maximum allowed rent level is also expected to move tenants towards the unregulated sector.

The residential investment market has delivered record high turnover volumes in the first three quarters of 2014. A total of more than € 1.8 billion was invested in Dutch residential investment property, an increase of over 230% y-on-y. Remarkable is the fact that institutional investment managers are again shifting to the buy side, whereas in the past years they actually formed the biggest sell-side suppliers. However, they are overshadowed by the massive entry of foreign investors, with the purchase of the Vestia portfolio by Patrizia clearly standing out. These buyers are facilitated by the increasing availability of debt, which is driven by new entrants to the market. The sell side will, in addition to new development schemes, increasingly consist of portfolios of housing corporations.

Please click in the right column to open the Netherlands Residential MarketView.