Two Austrian investors and a German hotel operator have teamed up on an ambitious mixed-use complex located in what was long seen as a backwater of the Dutch capital.
When Austrian investors Invester United Benefits and IES Immobilien purchased a land plot on the north bank of the IJ river in Amsterdam three years ago for a major mixed-use development, they were accused of being crazy. ‘People said to me: why on earth go to the north of the city, it’s the Siberia of Amsterdam!’ recalls Markus Teufel, owner and CEO of IES.
At end-June this year, during a lavish groundbreaking ceremony for the project, a beaming Teufel is still fully convinced of the area’s potential. ‘Its poor image is something that is stuck in the minds of Amsterdammers,’ he says. ‘Maybe because we are outsiders, we don’t have that view at all. We see it as a highly attractive location, so close to the river and directly opposite Central Station on the other side.’
The Y-Towers development, as the scheme is called, will consist of a four-star hotel, congress centre and residential tower when it is completed in 2020. Construction costs for the project, which is located on the Overhoeks site next to the A’DAM Tower (former Shell building) and iconic Eye Museum, are put at €200 mln. The development has a market value of €360 mln.
At 110 metres, the hotel will be the third-tallest tower in Amsterdam and have 580 rooms. It will be operated by Maritim, Germany’s largest owner-managed hotel group, on a 50-year lease. The hotel will house a congress centre at its base with the capacity to accommodate up to 4,000 participants, making it the second-largest such venue in the city after the RAI exhibition and convention centre on its southern fringe.
The congress centre will add much-needed space to Amsterdam’s overstretched conference and convention market, according to Maritim’s owner and supervisory board chair Monika Gommolla. ‘Amsterdam ranks 11th on the list of cities hosting the most congresses in Europe, but the potential for future growth is huge, given its cultural appeal, among other assets,’ she says. The economic boost for Amsterdam would be enormous, she adds. ‘German research shows that congress-goers spend 17x more during their visit than the average tourist.’
The second 101-metre high tower will comprise 250 apartments over a gross floor area of 27,000 m2. Of these, 100 will be fully furnished long-stay service flats (up to a year) while the other 150 will be apartments for sale. The size and targeted price range for the sale apartments will be decided nearer the 2020 completion date, ‘when Amsterdam’s housing needs are clearer,’ says Franz Kollitsch, founder and CEO of Invester United Benefits. ‘It will depend on issues like urbanisation and demographics, how many and what type of people are moving into the city centre at that time,’ he noted.
Teufel insists that far from adding pressure to a city already groaning beneath the weight of daily tourist inflows, the Y-Towers project will take pressure away from Amsterdam’s historic heart and create a new centre in the north. ‘I see it as the two chambers of a heart, linked by the river,’ he says.
North-South metro line
The long-awaited construction of the North-South metro line, due for completion next year, with a possible stop near the Y-Towers called Sixhaven, added to the site’s appeal for the investors. ‘A metro stop would mean a direct line from Schiphol Airport or the RAI to our congress centre,’ says Maritim’s Gommolla.
Gommolla says she was offered numerous potential sites for a congress hotel by the city authorities before whittling them down to a shortlist of three. The three plots were Oosterdoks Island – also to the north of the IJ waterway – next to the city library, a site on the Arena Boulevard in southeast Amsterdam and the Overhoeks site. ‘The Overhoeks plot stood out head and shoulders,’ she notes. ‘What attracted me most was its accessibility and proximity to the city centre.’
Maritim does not fear competition from rival congress hotels in Amsterdam like the planned 476-room Park Inn by Radisson near Sloterdijk station to the west of the city. The Park Inn is a redevelopment of a former office building occupied by telecoms operator KPN, a location also looked at by Maritim but ultimately rejected. Gommolla: ‘We are much bigger. Our biggest hall can accommodate 2,300 people and there is room for up to 4,000 congress visitors in total. You really have to build a top-notch congress hotel from scratch, you need high-class design and enough “breakout space”. The Y-Towers project is Maritim's first investment in the Netherlands.
Dutch bank financing
Dutch lenders ABN Amro and Rabobank are providing around €180 mln for the project - equally shared between the two banks - of which €150 mln is being guaranteed under the Dutch government's enterprise programme.
‘The German and Austrian banks we approached around three years ago wanted to co-finance the project with a Dutch partner,’ explains Franz Kollitsch, founder and CEO of Invester United Benefits. But the Dutch economy and financing markets were still recovering from the financial crisis and not yet ready for such an investment, he notes.
When approached at a later stage, ABN Amro Bank and Rabobank appeared not only willing to take part but to take on the full amount of the senior loan and the deal was clinched 6-8 months ago. ‘It has become a pure Dutch solution,’ says Kollitsch.
Besides the €180 mln senior loan, the financing for the project consists of a mezzanine tranche in the form of a listed German bond and an equity portion, provided by family offices and German pension funds.
IES Immobilien and Invester United Benefits say they plan to initiate talks with potential end-investors at the Expo Real trade fair in Munich in the autumn. ‘A 50-year lease with such a strong covenant as Maritim makes the project a very attractive investment for a long-term investor,’ said Erwin Krause, founder of Invester United Benefits.
About the investors
IES Immobilien-Projektentwicklung is an Austrian family-run company owned by Markus Teufel which specialises in real estate and urban development as well as in real estate investment consulting. Vienna-based Invester United Benefits is an integrated real estate service provider group with €1 bn worth of investment projects focused on Germany, Austria, and the Netherlands. Maritim is Germany’s largest owner-operated hotel chain and is also active in Mauritius, Egypt, Turkey, Malta, Spain and China.
