Dutch heavyweights target development as 'new core'

A trio of heavyweight Dutch investors is targeting development projects as a means of obtaining access to core product, it emerged at INREV’s Amsterdam Investor Intentions seminar last week.

Dutch pension fund giant PGGM, its smaller peer Bouwinvest and Syntrus Achmea Real Estate & Finance all cited scarcity of product as a motivation to move further up the risk curve.

‘There are always opportunities around the globe, also in Europe, but markets are getting tighter and more expensive,’ Guido Verhoef head of private real estate at PGGM, told the panel discussion. ‘That means you have to be more creative and move up the risk curve.’ PGGM is interested in value add and opportunistic strategies, he said, pointing specifically to new developments. But, he added, PGGM sees development as a means to obtain core product: ‘Our ultimate target is to get into core.’

While Bouwinvest is ‘very defensive’ in terms of its risk profile, development is a target, conceded Stephen Tross, managing director International Investments. ‘We won’t move up the risk curve by adding more leverage - the average for our international portfolio is 34-35%. But we will invest in development and niche strategies. We see some growth in Europe, which we haven’t seen for awhile here, although for most countries it’s still quite a distance away. There is growth, however, in the US and Asia, and we will be investing in opportunistic investments there.’

Syntrus Achmea Real Estate & Finance is set to remain a big buyer in the Dutch residential market, in particular development projects, reported Jaap van der Bijl, managing director Investor Relations. ‘We have €1 bn to allocate to Dutch residential. In Amsterdam, there’s a strong need for new mid-range rental apartments.’

For Syntrus Achmea as well, the ultimate goal of any development projects is to get access to core product, Van der Bijl said. For many plain vanilla core assets, the returns are not always satisfactory, he pointed out. ‘We remain very cautious and will not go broadly into value add and opportunistic investment, but we like development to core. We look at it on a deal to deal basis.’