Asian institutional investors are expected to step up their presence in the Netherlands this year as they seek to boost their allocation to real estate in core, stable markets.

Asian institutional investors are expected to step up their presence in the Netherlands this year as they seek to boost their allocation to real estate in core, stable markets.

Following two sizeable investments in Dutch retail and hotels over the past two years and the first direct office investment by an Asian investor earlier this year, more transactions are on the way, say market watchers.

‘Institutional Asian investors are carrying out their first investments in Europe and the Netherlands and they are here to stay,’ Bart Verhelst and Erik Langens of CBRE’s capital markets team in the Netherlands told PropertyEU.

With restrictions being lifted on investment abroad by Asian insurers and pension funds, their allocation to real estate ‘will grow quickly in the coming years’, they noted. An increase of just 1% in Asian insurers’ current real estate allocation ($134 bn) will result in over $200 bn being targeted at the asset class in the coming years, according to estimates.

AXA Real Estate - acting for Chinese conglomerate HNA - picked up the 5-star NH Grand Hotel Krasnapolsky in Amsterdam for €157 mln in 2013. Asian investors also joined the fray on a number of bids for properties last year, according to Verhelst and Langens.

And in February this year, Singapore’s First Sponsor acquired an office building in Amsterdam from AEW Europe along with a number of Singaporean private investors. The €51.5 mln deal took the form of a share acquisition. Also this year, an unnamed Japanese investor ploughed €250 mln into asset manager ASR’s Dutch Prime Retail Fund, bringing foreign capital in the fund to €785 mln.

With prime yields compressing to ultra-low levels in their home markets – yields in Tokyo are at 3.25% and an even keener 2.8% in Hong Kong – Asian investors are looking to Europe for better spreads. But with yields also tightening in Paris and London (3.75%), Amsterdam currently offers the best spread internationally at 45 basis points.

With foreign investor interest again anticipated to be strong, the Dutch market could see 2015 transaction volumes hit last year’s levels of just over €10 bn, say Verhelst and Langens. Foreign investors accounted for at least two-thirds of the investment total last year, with Anglo-Saxon and German players in the lead. To cope with the increased demand and trading activity, CBRE has expanded its capital markets team in the Netherlands to 27 people from just 10 in 2008. ‘We’re seeing the old-fashioned “war rooms” coming back for portfolios that are being traded, with four to five people working on a single deal,’ says Langens.

Vendors are seizing on the momentum to sell core-plus assets, a number of loan portfolios have yet to come to market and certain opportunistic investors which bought at the start of the crisis are ready to sell out again. In terms of asset type, residential property is expected to be less readily available after two major portfolios were swept off the market last year by Germany’s Patrizia and UK-based Round Hill Capital.

Asian investment into the Netherlands will be one of the themes discussed during the International Conference Programme - organised by PropertyEU - at the Provada Real estate fair in Amsterdam from Tuesday 2 June to Thursday 4 June.

See also our Special Report on the Dutch market in the June edition of PropertyEU Magazine