Dutch housing popular with German banks – survey

Around 20 German banks plan to set aside more money for financing Dutch residential investments in the coming years, a survey by adviser Capital Value shows.

Stable rents and attractive returns were cited as the main reasons for targeting Dutch housing, according to the survey, which polled 40 of Germany's largest banks.

In addition, higher demand for financing in the Netherlands and the increased competition and available capital on the German financing market play an important part, Capital Value said.

Of the banks surveyed, 40% are already active in the Dutch property market. Over the past few years, they have gained experience in financing offices and retail properties. Of these banks, 22% already have experience in financing Dutch rented homes.

‘The growing interest shown by German banks and other international financiers confirms that the international capital market is naturally sensitive to cyclical trends,’ said Thijs de Graaf, researcher at Capital Value. ‘International banks significantly scaled back their financing activities during the financial crisis. Now that the residential investment market is picking up and the available capital is increasing, we will be seeing a return of these parties to the Dutch market.’

Most German banks are prepared to finance portfolios worth several hundreds of millions of euros, the survey found. On average, the minimum amount per loan is €15-20 mln. Private banks and Landesbanken are generally willing to finance larger volumes (up to €200 mln), while cooperative banks generally look for smaller financing possibilities, De Graaf said.

The survey further found that German banks are almost always willing to finance more than 50% of the overall investment. On average, they are prepared to provide a maximum loan-to-value of 68% of the investment for properties at primary locations. The LTV ratio for secondary locations is much lower with an average maximum LTV of 60%.

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