Strong demand and low supply point to the Dutch residential sector continuing to offer opportunities to investors for a long time to come, experts agreed at Real Asset Media’s Cradle to Grave Rental Solutions – Urban Being – The Future of City Living Investment Briefing, which was held in Amsterdam recently.
‘The mismatch between supply and demand means that the resi market will be stable and solid for years to come’, said Jaap van der Bijl, CEO, Altera Vastgoed. ‘We expect this mismatch to continue for decades because there is a lack of new stock coming’.
Resi is also a mature market in the Netherlands, he pointed out, as pension funds have been investing for decades, as well as a profitable one: in the last four years it has delivered total returns of 15%.
There is plenty of money available to invest, as the influx of capital into the Netherlands shows no sign of slowing down.
Amsterdam is a particular focus for investors. ‘In our most recent survey 46% of respondents favoured Amsterdam as the best post-Brexit investment,’ said Clare Thomas, Partner, CMS. ‘It has overtaken Paris, Berlin and Frankfurt as an alternative to London’.
The level of demand is reflected in prices. ‘Years ago if we sold to investors we had to give them a discount, but now institutions have a long-term strategy, they need to be in Amsterdam so they are pricing in already the increase in value,’ said Gert-Wim Bos, Director, COD. ‘There is no price differentiation between build to rent apartments and individual sale apartments, which is quite a shift’.
There is clearly a need for more housing to be built, but developers are battling with tighter regulations and increased costs.
‘We face many challenges as a developer,’ said Bos. ‘Municipal regulations are getting more and more strict and building costs are at an historical high. Affordability is also becoming an issue, particularly in Amsterdam. High house prices mean people have no choice but to rent, but price levels of rents are also increasing’.
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