Dutch and foreign investors are eager to invest in real estate, also in the mid-priced housing sector. “This is a stable investment with a reliable return. And at low risk.”
These are the words of Frank van Blokland, Director of the Association of Institutional Property Investors in the Netherlands (IVBN). Van Blokland promotes the interests of Dutch and international investors with an office in our country. He has noticed increasing interest from abroad in mid-priced rental housing in the Netherlands.
This trend has also been observed by Wienke Bodewes, chairman of the marketing organisation Holland Property Plaza (HPP). He says, “The demand is tremendous, not only in the cities, but across the entire Netherlands. There are a number of reasons for this. Firstly, the population is growing and households are becoming smaller. The number of self-employed has also increased considerably. These people are often not eligible for social housing or a mortgage, which is also the case for young families. Those groups depend on mid-priced rental housing.”
This trend will continue into the future. This is good news for investors but, of course, should also be worth the investment. This is the case as well. Van Blokland continues, “Compared to the amount invested, the annual rental yield is modest, at three, four or five percent. So those wanting to cash in on their investment after three or four years will be disappointed. But those who are in it for the long haul will experience that the mid-priced housing sector offers a highly acceptable return and at low risk. Rental housing also offers institutional investors good protection from inflation.”
Figures from HPP show that the net dividend in 2017 was around four percent for many investors. That year, the value increase of mid-priced rental homes was as high as 13 to 14 percent for many - a record year.
Van Blokland continues, “But you can only cash in on that if you sell part or all of your properties. And you would then be wise to re-invest in new rental housing, which, of course, will have become more expensive. That is why investors opt for long-term investments in rental housing.”
Co Koning also sees opportunities in non-regulated affordable housing. As policy director at Vastgoed Belang, Koning promotes the interests of private investors. “International private investors can definitely benefit from the housing shortage in the Dutch market, especially the demand for affordable private rental housing. But it is important to stay fully up-to-date on Dutch legislation and regulations.”
Van Blokland agrees. “It is not easy to enter into a predominantly regulated housing market as an ‘outsider’.
Good contact with the municipalities involved, for example, is essential. Koning adds, “Municipalities need to be willing to sell land at realistic prices. You also need to make good agreements on the period of time during which the property is intended as mid-priced rental housing. The housing market can be easily predicted for five to ten years. But the demand for mid-priced rental housing after that is more difficult to predict.”
Numerous developments are taking place around the country. Non-regulated affordable housing is high on the political agenda in the Netherlands. The three property experts follow developments closely. They are pleased with the attention that is being devoted to the mid-priced rental housing sector, but also feel it is important that this remains the only non-subsidised part of the housing market subject to market forces. “More regulations are not good for the investment climate,” says Bodewes.
The best advice Koning has for private investors is to become a member of Vastgoed Belang. “It may sound like preaching to the choir, but we’ve been informing our members for years about updates to legislation and regulations. Also international investors.”
Van Blokland and Bodewes advise foreign institutional investors to work with an experienced Dutch asset manager. Bodewes explains, “Many Dutch organisations have a fund in which foreign investors can become a shareholder. This way, they won't need to build their own portfolio, since they will already have one with an immediate pay-off. This also ensures them of the necessary knowledge of the Dutch market.”