‘The Dutch market punches above its weight in Europe’

The Netherlands punches above its weight in the European real estate market

The Netherlands punches above its weight in the European real estate market, delegates heard at Real Asset Media’s Netherlands Investment Briefing, which was held last week at Taylor Wessing’s headquarters in London.

‘It has strengthened its position as the 4th largest investment market in Europe, which is remarkable for such a small country,’ said Raphaël Rietema, Director, EMEA Strategy & Research, CBRE Global Investors. 

Netherlands Keynote: Raphaël Rietema, Director, EMEA Strategy & Research CBRE Global Investors
Filmed at the Netherlands Investment Briefing, London by Real Asset Media.

It now sits behind Germany, the UK and France and just ahead of Spain with an investment volume of €19 bln in the first three quarters of 2019. By Q3 last year the figure was higher, €22 bln, but according to Rietema Q4 will look better, because there is a lot of activity and a lot of liquidity in the market’.

The Dutch market has become much more diversified in recent years, but residential stands out as the star sector, followed by offices, industrial, retail and hotels. The Netherlands have the second-biggest residential market in Europe after Germany, worth €6 bln.

‘The investor base has also become much more diversified’, said Rietema. ‘The market used to be dominated by domestic players with a 60/40 ratio, but now it is the other way around’. 

The office sector, which used to be oversupplied, has been transformed. ‘Vacancy rates have been falling for the past ten years and now they are extremely low, especially in Amsterdam’s CBD’.

Amsterdam has also become the third city in Europe for tech-based employment after Dublin and Berlin and ahead of London. ‘This is the market that has seen the steepest rental growth,’ said Rietema. ‘It is a structural trend that is set to continue and it will result in more rental growth in the future’.

In the increasingly intertwined logistics and retail sectors, demand is such that vacancy rates are low despite a lot of development activity. 

‘Demand drivers for logistics are changing,’ said Rietema. ‘Now it is less about trade and exports and more about the restructuring of supply chains because of e-commerce. In five years’ time internet sales will be 21% of all retail sales compared to 14% now’.

The Netherlands will catch up with the UK and be far ahead of other European countries.

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‘North Amsterdam is a great development opportunity’

Adam Irányi, Head of Investment, Europe II, Union Investment Real Estate GmbH

Adam Irányi, Head of Investment, Europe II, Union Investment Real Estate GmbH

Adam Irányi, Head of Investment, Europe II, Union Investment Real Estate GmbH, tells The Real Estate Day that the area is an attractive location for resi, hotel and offices because the river is a natural border but it is close to the city centre and it takes 3 minutes on the ferry to get to Central Station


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‘Alternatives are becoming mainstream’

The trend is being driven by the new generations that have a different mindset and investors and operators are adapting to the changing landscape.

‘In 2030 we will not be talking about alternative sectors anymore, because they will be standard and mainstream, and renting will be the new normal,’ Samuel Vetrak, CEO, Bonard, told Real Asset Media’s European Alternative Investment Outlook 2020, which took place in Amsterdam recently.

The trend is being driven by the new generations that have a different mindset and investors and operators are adapting to the changing landscape.

Dirk Bakker, Head of EMEA Hotels, Colliers International, Asli Kutlucan, Chief Development Officer, Cycas Hospitality BV, Ron van Bloois, Partner, HEVO, Samuel Vetrak, CEO, BONARD and Crispijn Stulp, Country Head the Netherlands, AXA Investment Management discuss the opportunities for investment in Hotels, Student Housing, Healthcare and similar sectors.
Filmed at the Alternatives Investment Briefing, Amsterdam, November 2019 by Real Asset Media.

‘The young don’t want to own anything,’ said Asli Kutlucan, Chief Development Officer, Cycas Hospitality. ‘They will be in student accommodation to begin with, then move to micro or co-living or extended stay places as they progress in their careers. They will rent apartments and will end their lives in senior housing. That’s the lifecycle of the next generation’.

No wonder investors are piling into all the new forms of residential. Operators are already blurring the boundaries between student housing, co-living, micro-living and hospitality and it is a trend that is just beginning. 

‘We like merging a few concepts together under the same roof and becoming a hub,’ said Kutlucan. ‘We can provide different services to different people that go well together, for example have a lifestyle hotel for young professionals alongside student housing for mature students.’

Student housing has been on the most notable upward trajectory and has attracted institutional investors because it is liquid, transparent and counter-cyclical. There are now over 700 companies active in the sector and there will be consolidation ahead.

‘Finding capital is not a problem now, what is difficult is finding the right partner and the right assets in good locations,’ Vetrak said. There are investors with billions of euros looking at the Italian market, for example, but the problem is lack of opportunities.

‘It is a recession-proof asset class and that is why so many institutional investors are transferring capital from office and retail into student housing,’ he said. Most European Universities are aggressively marketing abroad, so the number of international students is set to grow even faster.

The PBSA market in the UK and Continental Europe is set to double to €6 bln.

Developers and investors are increasing their involvement but operators are in short supply. ‘A problem with student housing is the lack of operators,’ Vetrak said. ‘If there were more independent ones the sector would progress even faster’.

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‘Resi is the biggest asset class to invest in at the moment’

Dirk Bakker, Head of EMEA Hotels, Colliers International

Dirk Bakker, Head of EMEA Hotels, Colliers International

Dirk Bakker, Head of EMEA Hotels, Colliers International, tells The Real Estate Day that in the Netherlands residential is top of the list, offices are in demand but supply is limited, while retail is undergoing big changes and more F&B offering is needed in Amsterdam


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‘Operational models will become prevalent’

Operational models will become prevalent in Europe as more investors follow the megatrends and put their capital in alternative sectors, experts told Real Asset Media’s European Alternative Investment Outlook, which took place in Amsterdam recently.

Operational models will become prevalent in Europe as more investors follow the megatrends and put their capital in alternative sectors, experts told Real Asset Media’s European Alternative Investment Outlook, which took place in Amsterdam recently. 

‘Residential is the biggest asset class to invest in at the moment in Europe,’ said Dirk BakkerHead of EMEA Hotels, Colliers International.‘Real estate is becoming more expensive, so more branding, more design and more lifestyle are used to drive value from buildings and new investment forms are coming in’. 

Dirk Bakker, Head of EMEA Hotels, Colliers International, Asli Kutlucan, Chief Development Officer, Cycas Hospitality BV, Ron van Bloois, Partner, HEVO, Samuel Vetrak, CEO, BONARD and Crispijn Stulp, Country Head the Netherlands, AXA Investment Management discuss the opportunities for investment in Hotels, Student Housing, Healthcare and similar sectors.
Filmed at the Alternatives Investment Briefing, Amsterdam, November 2019 by Real Asset Media.

The resi sector is in a state of flux. Now it’s tenants and customers that are driving change while investors and developers adapt. In future companies will no longer develop products and then find tenants, he said, but it will be tenants who demand a certain product which will then be purpose-built.

‘Brands really matter because we are witnessing the operationalisation of real estate, to coin a word,’ said Crispijn Stulp, Country Head the Netherlands, Real Assets, AXA Real Estate Investment Managers. ‘There’s a combination of factors all pushing investors into alternative sectors’.

As tenants or customers demand flexibility, companies have to become flexible themselves.

‘We operate 28 hotels and 14 brands, 50% of our portfolio is leases but we keep inventing different structures, creative and hybrid, we are very flexible on that front,’ said Asli Kutlucan, Chief Development Officer, Cycas Hospitality. ‘We like the open-mindedness of different capital structures. It is yet another sign that the boundaries are falling’.

One example of a successful innovation is the ‘double-decker’ hotel concept, which combines a trendy hotel, like Moxy, with an extended-stay such as the Marriott Residence Inn. As the lines between business and leisure travel become increasingly blurred, dual-branded hotels make sense.

In general ‘the outlook for hotels in Europe is very healthy, as more tourists come, especially from Asia, and more cities become interesting destinations’, Bakker said. ‘In fact the growth of tourism is our biggest problem in the Netherlands, as supply cannot keep up with demand. Keep in mind that only 2% of the Chinese population has a passport today’. 

Healthcare is another alternative sector that, supported by demographic factors, is attracting more interest. 

‘We see investors in the Netherlands, the UK and Germany paying more attention to nursing homes and medical office buildings,’ said Ron van Bloois, Partner, HEVO. ‘I believe the senior housing sector will explode. ESG is also driving demand for asset classes that have an impact like education and healthcare.’

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‘The senior housing sector will explode’

Ron van Bloois, Partner, HEVO

Ron van Bloois, Partner, HEVO

Ron van Bloois, Partner, HEVO, tells The Real Estate Day that deal flow will be over €1 bln in the Netherlands alone as more investors focus their attention on nursing homes and medical office buildings, following a trend that’s been seen in the UK and in Germany


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‘More capital flows from East and West’

European real estate will continue to attract significant capital flows from the usual suspects but also from new entrants, which means that competition for assets will become even more intense

European real estate will continue to attract significant capital flows from the usual suspects but also from new entrants, which means that competition for assets will become even more intense, delegates heard at Real Asset Media’s Real Estate Capital Flows & Investment Opportunities – German and Italy, which took place at PwC’s headquarters in Milan last week. 

If South Korean investments were the big story of this year, 2020 might see Japan finally stepping into the European market in a significant way.

Christiane Conrads, Head of German Real Estate Desk, PwC Legal AG, Douglas Edwards, Head of Group Equity Raising & Client Services, CORESTATE Capital Group, Gabriele Pompei, Managing Partner PURE Investment Management and Lia Turri, Partner, Real Estate Leader PwC, Italy discuss and compare the opportunities for Real Estate investment in Italy and Germany.
Filmed at the Italy & Germany Investment Briefing, Milan, November 2019 by Real Asset Media

‘Korean investors are being a lot more selective now, but In Japan there is $40 bln and more of capital ready to be invested, said Douglas Edwards, Head of Group Equity Raising & Client Services, CORESTATE Capital Group. ‘They will become significant players in core markets and in residential in the next two or three years’.

Canadian capital, which is already present in France and Germany, will move beyond those two countries in 2020, he predicted. ‘There will be money coming from the Nordics as well and what is interesting is that many are chasing core and core plus, but there is plenty of opportunistic capital as well’.

Capital, especially intra-European capital which accounts for 65% of flows, will

continue to come from all sources, from institutions to retail to family offices. Different types of investors will have one thing in common: they will be more selective and looking for specific assets.

The urbanisation trend across Europe is making residential in all its forms very attractive, but across all sectors the sustainability theme is becoming more dominant. ‘Interest in ESG has increased enormously over the past twelve months and it will continue to grow, because it is driven by regulation but also by investors and by occupiers who want a better working and living environment,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal.

Sustainability is no longer an option but a necessity now. In places like the German cities, where land prices are high and the shortage of assets is acute, ESG requirements can be a catalyst for redevelopment.

‘Germany has a lot of old office stock that needs to be demolished or refurbished,’ said Thomas Veith, Partner Real Estate PwC Germany. ‘This need presents a huge opportunity for investors’.

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‘The new land tax in Germany updates valuations’

Dr Claus Herrmann, Prokurist, Tax & Legal, PwC

Dr. Claus Herrmann, Prokurist, Tax & Legal, PwC

Dr Claus Herrmann, Prokurist, Tax & Legal, PwC, tells The Real Estate Day that both Houses have approved the new regime as requested by the Constitutional Court to bring up to date valuations that were stuck at 1964 so now all will be updated to January 1st 2022.


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‘Resi is the best opportunity in Italy’

The Italian residential sector is becoming a magnet for foreign investors and attracting institutional capital even from notoriously risk-averse German companies

The Italian residential sector is becoming a magnet for foreign investors and attracting institutional capital even from notoriously risk-averse German companies, market experts told Real Asset Media’s Real Estate Capital Flows & Investment Opportunities – German and Italy, which took place at PwC’s headquarters in Milan last week. 

Christiane Conrads, Head of German Real Estate Desk, PwC Legal AG, Douglas Edwards, Head of Group Equity Raising & Client Services, CORESTATE Capital Group, Gabriele Pompei, Managing Partner PURE Investment Management and Lia Turri, Partner, Real Estate Leader PwC, Italy discuss and compare the opportunities for Real Estate investment in Italy and Germany.
Filmed at the Italy & Germany Investment Briefing, Milan, November 2019 by Real Asset Media

‘There is growing interest in Italy’s residential sector,’ said Lia Turri, Partner & Real Estate Leader, PwC Italy. ‘The best opportunity we see is the conversion of office buildings into serviced apartments or other types of resi with services similar to hotels, which is much in demand’.

Germany’s Corestate Capital Partners has already zoomed in on the market it wants to invest in for its first foray into Italy.

‘We see opportunities especially in student housing and micro living in Italy, which are very underserved markets’, said Douglas Edwards, Head of Group Equity Raising & Client Services. Corestate. ‘There are around 11 students for every bed, while in Germany the ratio is more like 2 to 1, so the supply and demand imbalance is striking’.

Italy will become part of Corestate’s pan-European operational platform. For its first venture into the market the group will focus on student housing and will widen its horizons beyond Milan, where most foreign investors tend to land.

‘Land in Milan is very expensive,’ said Edwards. ‘We are looking at several university towns like Bologna, Turin and Venice. We plan to finalise our first deals in Q2 next year’.

Companies’ need to diversify is working in favour of alternative and niche sectors.

Resi, in particular, is on the up because of positive sentiment. At a time of economic uncertainty and political instability, resi is seen as a defensive play and a safe haven, experts agreed.

‘Student housing is the sector that has the biggest potential in Italy, especially in university towns like Florence, Padua and Bologna that have a high number of foreign students coming on the Erasmus or other exhange programmes,’ said Gabriele Pompei, Managing Partner, Pure Investment Management.

Resi is the biggest trend for the future, but at present the traditional office sector continues to dominate investors’ radar screens. Last year the office sector reached a €2.3 bln investment volume, an increase of 50%, according to PwC data. Milan’s status as favourite market is confirmed, as the city accounted for 65% of all investments.

Foreign investors’ presence in Italy has strengthened further this year. In 2018 international investors accounted for 65% of the total, while in 2019 the percentage has risen to 84%, while domestic investors’ share has shrunk to 16%. ‘The switch started in 2012 and has progressed gradually, but this year the pace has accelerated considerably,’ said Turri. ‘Until recently Italy attracted mainly opportunistic investors, but now more core and core plus investors are coming. We are seeing substantial capital flows and more and more big international players in the market’.

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‘A huge number of opportunities in Italy’

Lia Turri, Partner, Real Estate Leader PwC

Lia Turri, Partner, Real Estate Leader PwC

Lia Turri, Partner, Real Estate Leader PwC, tells The Real Estate Day that repurposing assets is the best bets for investors as many obsolete office buildings will need to be converted into residential and also state assets coming to the market will have to be regenerated


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