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Pension funds investing heavily in new construction projects

A record amount of 5 billion euros is being invested in rental housing in the Netherlands in 2017. This is an annual 20% rise and three times what it was five years ago.

The Netherlands is a stable transparent market with entry-level prices lower than in many other major European cities. Due to a very low interest rate and the economic recovery, record amounts are not only being invested in the Dutch housing market but also in retail premises, offices and distribution centres. This is making Dutch housing desirable not just among Dutch pension funds but also among investors throughout the world.

Dutch pension funds are making good use of the current market situation to sell part of their residential portfolio and will be selling 700 to 800 million euros in the coming weeks. In particular private and foreign investors are displaying an interest in the residential portfolio owned by Dutch pension funds.

It could have been even more

In 2017, Dutch pension funds purchased 17,000 new-build homes through investment vehicles such as Amvest, Vesteda and Syntrus Achmea. This is a 35% increase compared to 2016, which makes this a record investment year, and the invested assets of pension funds amount to more than 3.5 billion euros. These figures originated from Capital Value, a property consultant that also said it could have been even more. If more houses had been built, the pension funds could have invested in another 10,000 new-build rental homes.

After all, Dutch rental housing is generating an attractive long-term return. This is a significant motivation for institutional investors to invest in new construction projects for the rental market; for private and foreign investors, it’s a good reason to invest in existing rental housing.

Source: Het Financieele Dagblad (news article originally published in Dutch)