PropertyEU: Resi on a high in the lowlands

A burst of deals in the residential sector involving large sums of mostly cross-border money put the Dutch market firmly in the international spotlight. Whether by coincidence or not, all the deals converged at the Provada property fair in Amsterdam this week, giving the annual show which has always been a largely domestic affair a buzz it has not really felt since the heady days of the boom years. The biggest coup came from UK-based Round Hill Capital, which announced on Tuesday that it was buying a nationwide portfolio of housing units from CBRE Global Investors for €180 mln in the biggest deal of its kind in the Netherlands since the financial crisis. For Round Hill, the deal marks its entry into the Dutch residential market, and it is looking to buy more, according to managing director Kirk Lindstrom. ‘We’re looking at opportunities on a case-by-case basis,’ he said, noting that Dutch resi assets now offered a ‘similar risk-return equation’ to the German market, which it entered in 2007. In the student housing sector, another cross-border player in the guise of German student housing specialist International Campus made its first foray into the Dutch market through a €150 mln joint venture with Dutch operator Stichting Duwo. The pair will develop five student housing complexes providing 2,250 apartments in total, of which four will be located in Amsterdam. Domestic investors have not been sitting still either. Asset manager Bouwinvest seized the Provada to announce it was investing around €150 mln in rental homes in Amsterdam and The Hague/Rotterdam area. And in another major deal, Dutch insurer Nationale Nederlanden (NN) said it was investing up to €750 mln in a portfolio of commercial real estate loans issued by ING Real Estate Finance. In a first tranche, NN will invest €400 mln in loans secured on Dutch assets. ‘I think this deal is the first step on the road to mobilising more institutional money for the Dutch property market, in line with what business and government have been calling for,’ said Peter Göbel, CEO of ING Real Estate Finance.

Residential reforms
Aside from these concrete deals, the list of investors claiming they are looking closely at the Dutch market and poised to strike seems endless. German investor Patrizia Immobilien and Swiss-based Corestate Capital both told PropertyEU at Provada that they are scouring the residential market, while there is reportedly also interest in Dutch property generally from Middle Eastern players, Chinese and Japanese money as well as Australian and New Zealand funds. From where all the interest? According to Dutch housing minister Stef Blok, who addressed PropertyEU’s Netherlands Investment Briefing, the answer lies in a series of government reforms to the private and public housing sectors. Steps had been taken, he said, to address the high mortgages and mortgage rebates available to private home owners and to liberalise rent control limits in the private rental sector. In addition, the encroachment of the country’s social housing associations on the private rental sector had been rolled back. ‘It is very important for the Dutch residential real estate market that investors are not confronted with an uneven playing field,’ he told the briefing.

Judging by the level of interest, the reforms have not gone unnoticed by investors. ‘Now is the time to step into the Dutch market,’ Klaus Weber, head of transactions at Patrizia Immobilien, said. Government reforms, coupled with a housing shortage, low inflation and population growth in the major cities made the Dutch market an attractive bet, he said.

‘Residential is the most attractive real estate investment asset class in the Netherlands right now as the market has reached a key turning point and we expect steady increases in both prices and rents over the next few years,’ said Allard van Spaandonk, Bouwinvest’s director for the Netherlands. Horst Lieder, CEO of International Campus, is similarly upbeat: ‘The Netherlands is a very attractive market. The demand for small living spaces will remain high in the long term in a large number of cities.’

Will there be enough product to go round? A number of ailing social housing corporations are offloading assets and the expectation is that more will follow as they come under pressure to focus on their core business of providing homes for low-income families. Following the Vestia corporation’s move to dispose of almost 7,000 housing units, another major fund announced at Provada that it was looking to shed close to 4,900 homes. But the demand for housing – from consumers and investors alike – remains huge. According to the official statistics, half a million extra new homes will be needed in the coming 10 years to meet the growth in the number of households, with a similar number required by 2020.

The answer, say some, lies in new development. Dutch asset manager Syntrus Achmea, for one, is already going down that road. It is pursuing an active strategy of development at inner-city locations across the country, so that it can, as director of international real estate Geert de Nekker put it, ‘build quality product in the right spot’.

Could conversion of empty offices be another option? The Netherlands has plenty of those scattered across the country. The search is on for the international player who dares venture into that space.  Source: PropertyEU