Dutch pension funds’ appetite for domestic property is returning as the market bottoms out, delegates heard at the Pensioenforum in Scheveningen on Thursday.
During a roundtable session, Wim Wensing, director of investment management at Amvest, said larger pension funds in particular had started showing growing interest in the asset class in the third quarter of the year.
Wensing said investors were focusing on high-quality retail centres and domestic property in growth areas, such as the Dutch Randstad, where occupancy rates were increasing.
He added that dividend yields were exceeding returns from government bonds by more than 4%.
Wensing noted that institutional investors were particularly interested in prime retail centres that also act as meeting places, as demand for retail space in general falls due to the growing popularity of internet shopping.
He also said that liquidity at many investment funds was increasing. Fund managers were likely to shift their focus from capital raising to deploying capital next year.
Wensing said investors remained very suspicious of offices. “As these carry much more cyclical risk, potential investors demand higher returns,” he said.
Amvest specialises in Dutch residential investments.
Wensing further stressed that transparency in Dutch real estate had improved, but added that work still needed to be done to restore faith among pension funds in the accuracy of property valuations.
During another roundtable session, a board member of the €1.4bn pension fund of coffee and tea producer Douwe Egberts announced that his scheme would invest 5% of its assets in Dutch residential mortgages.
He said the pension fund was aiming for extra returns in relation to its fixed income portfolio, and that the investment would come at the expense of its government bond holdings.
The new mortgage portfolio would become part of the 55% matching portfolio of the pension fund, he added.