Residential is a sure bet in the Dutch market, experts agreed at Real Asset Media´s Netherlands Investment Briefing, which took place online on the REALX.Global platform yesterday.
¨The best opportunities are to be found in resi, because there is a shortage of supply across sub-sectors, from co-living to student accommodation to senior housing,¨ said Peter Helfrich, managing partner, Primevest Capital Partners.
¨There is a persistent mismatch between supply and demand,¨ said Jaap van der Bijl, CEO, Altera Vastgoed NV. ¨According to the authorities the country needs 1 million new residential units by 2030, so a lot of building needs to be done. My advice is go for the young and go for the old and build as much as you can.”
The solution to the housing crisis would be a swap between generations: as baby-boomers, who tend to be owner-occupiers, gradually move out of their single family homes into senior accommodation, young families could move into their homes.
¨In order to incentivise people to leave their homes and move, senior accommodation must be pleasant and also affordable, in the €700-€1,200 per month range¨, said van der Bijl. ¨It is a massive market, and developing it would also solve the lack of family housing for young families.”
The problem is that the supply is not there yet. There are ten-year waiting lists for affordable homes, buying is very expensive and the senior housing market is under-developed.
Sustainability regulations are the main risk visible
¨Our business is dominated by resi, which is a super-secure asset class,” said Rogier Bos, real estate finance Benelux, Berlin Hyp. ¨From the point of view of a senior lender the risks we see are sustainability regulations. In future portfolios must remain sustainable and that could be quite costly, as making sure a portfolio is green will become increasingly onerous.”
This applies to all real estate sectors, but as the yields are tighter in residential it becomes more of a challenge, Bos said.
¨High demand and low supply is the obvious plus of residential,” said Helfrich. ¨The minus is that regulations are a challenge, because they introduce an unwelcome element of instability.¨
Another solution to the housing shortage that has already been explored is converting offices into residential, provided the conditions are right.
¨The best offices have already been turned into resi, because conversions have been taking place over the last few years,” said Tia van Beek, director transactions, the Netherlands, Principal Real Estate Europe. ¨The offices that are left may not be suitable for resi, either because of the building or because of the location.”
But when conversions work, they work very well, creating much-needed housing without having to build new stock. They can also boost the office sector, taking out excess obsolete stock.
The Hague is a positive example, said van Beek: ¨Around 400,000 sq m were converted, and taking them out really helped the office market there. It´s been a success story.¨