Bouwinvest targets Dutch residential

Dutch investment manager Bouwinvest is prepared to invest up to €500 mln in the Dutch market and is targeting residential real estate in particular, CEO Dick van Hal said.

Speaking at the PropertyEU Netherlands Investment Briefing at Provada in June, Van Hal said now was the right time to invest in the Netherlands. ‘There’s little competition for the acquisition of prime assets, it’s a good time although you do have to be careful when picking properties.’

While international private equity players and opportunity funds are circling the distressed end of the market, Van Hal is particularly focused on prime property. ‘We see a polarisation in the market, prime yields are very stable and there’s still some room for yield compression. The secondary and tertiary markets are a different story.’

Van Hal said the yield gap with other asset classes was very big and that the risk-return profile was very attractive. 'But you do have be selective and pick the prime assets. We’re investing a huge amount in the residential market. There’s a lot of scarcity, good direct returns and it’s a good inflation hedge as rents will rise.’

Following a number of legislative changes, a more level playing field is being created for the commercial rental market, Van Hal said. ‘There’s a scarcity of commercial rental housing and we see opportunities there. Gross direct yields are around 5-6% and the risks are very low with prospects of 3% rental growth. This is an excellent product for pension funds all over world.’

Boris van der Gijp director strategy & research SyntrusAchmea Real Estate & Finance, is also positive about the residential sector. The outlook for the sector is ‘really stable’, he said. ‘Tenants with high incomes are being forced out of social housing into the market sector and landlords are being allowed to raise rental levels a bit. The impact of the regulatory framework is also creating a shift; the situation is becoming more and more stable.’

However, huge differences exist across the country, he warned. ‘There’s a huge difference between primary locations in the Randstad (conglomeration in the west of the country, ed.) and Brabant region (urbanized belt in the south around Eindhoven and Den Bosch, ed.). Outside the Randstad, you have to be very careful about where you invest. The ROZ-IPD index figures show that vacancy rates are rising outside the Randstad, particularly for apartments in suburban locations, and very expensive apartments with rents of over €1,000 outside the big cities. There are some great prospects for the sector, but you have to be careful about picking the right properties. It’s a good idea to team up with a local player.’

The full story appears in the July-August edition of PropertyEU.