Looming regulations scare off resi investors in Dutch market

Concerns about potential new regulation in the rental housing market in the Netherlands have prompted many investors to press the pause button, an expert panel agreed during an investment briefing on the Dutch property market held recently at the Amsterdam office of law firm CMS.

Tijmen Brüne.

The Dutch parliament has approved a proposal to ban short-term temporary lease agreements as part of a campaign to regulate the mid-market rental sector, Tijmen Brüne, senior real estate lawyer at CMS, pointed out. “The Dutch government has fallen since, and new elections will be held in November, so it’s still unclear what’s going to happen. We assume no new regulations on this topic will pass before November, but there are no guarantees.”

Several different factors are contributing to the uncertainty about current pricing levels in the wider property market, but the government’s plan for new regulations in the residential sector is the hottest topic, Bas Wilberts, director Savills, agreed. Under the plans, roughly 90% of all rental houses – or 300,000 units – will in future be regulated.

“It’s extremely difficult to get the full story to make the complete assessment needed to invest in any project, whether it be an existing development or a new build. Mid-market residential investments are, generally speaking, a super stable long-term investment, but construction costs are rising and that is having an impact on price levels too. Nevertheless, the mismatch between bid and ask levels is simply too wide now which is not helping the situation.”

Bas Wilberts.

Logistics market also faces greater government intervention

The logistics real estate market has likewise seen a sharp slowdown in trading activity since interest rates started trending upwards from mid-2022. “Growth will remain constrained with government authorities wanting to check and verify which locations are suitable for new developments,” CMS’ Brüne added. “In fact, I wouldn’t be surprised if local authorities ban big boxes and hyper-large data centres as well in future.”

Logistics properties are nevertheless still in demand, Laurien van Wieringen, director investment and asset management at M&G Real Estate, said. “There’s still a good momentum for logistics. The occupational market remains strong thanks to record-low vacancies, and the yield shift has been quite big. Before the summer there were some forward-funding opportunities for new developments that didn’t sell and projects that have now reached completion may well come back to the market.”