Investors queue up to enter Dutch PRS market

Investors are looking to spend a record EUR5.5 billion in the Dutch housing market. In a situation that has echoes of the UK’s newly growing institutional private rented sector, Holland is seeing strong investor interest, while new supply is constrained.

Research published by Dutch analyst Capital Value identifies EUR1.6 billion of capital from Dutch pension funds, more than EUR1 billion from private investors, and EUR3 billion from foreign investors, all looking for property to buy in Holland.

“For the Dutch housing market it is a good thing that, in addition to Dutch investors, there are so many foreign investors that are prepared to purchase rented housing,” said Capital Value managing director Marijn Snijders. “Consequently, more and more foreign banks are expressing an interest in financing housing in the Netherlands.”

“Previous research had already revealed a growing interest on the part of German banks. We are now seeing that banks from other countries are also keen to get a foothold on the Dutch market. This will lead to a more diverse financing market which is a healthy development for the Dutch housing market.”

As in the UK, the sales market is strong, meaning house builders are constructing for private sale and restricting the amount of new homes built for rent. And as in the UK, the shortage of supply against demand for rental housing looks like it will be unresolved for some time to come.

“Never before has so much capital been available for investments in rented housing,” said Capital Value’s Kees van Harten. “Local authorities, investors, the construction sector and corporations have a joint responsibility to ensure that this capital can actually be used. If there is insufficient supply on the market, there will be a risk that investors will start looking for alternative opportunities.”

In a similar way to that being suggested in the UK as a way forward, Capital Value says local authorities have a key role, encouraging developers to include market rent housing in project plans.

Last year’s largest investment transaction in the Dutch housing market saw German investor Patrizia – also lining up for action in the UK rented housing market – spend EUR578m buying a portfolio of homes from Vestia.

Also active was Round Hill Capital, which acquired a series of Dutch housing portfolios through the year. It spent EUR365m in the autumn on a portfolio of 3,786 homes across Holland.

Said Round Hill’s Michael Bickford: “We continue to believe that the housing market in the Netherlands represents an attractive investment opportunity due the positive fundamental backdrop in the Dutch market, together with the stable cash flow of this asset class and our established residential management capabilities.”

Could this level of activity start to take place in the UK? It could, within a couple of years. By the end of 2015, for example, property developer Criterion Capital aims to have up to 3,000 rental apartments under construction, all potentially for sale to a portfolio investor.

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