Investment in the Dutch residential market totalled €2.3 bn in the third quarter of 2024, bringing transaction volumes for the first nine months of the year to €5 bn, more than double the year-earlier figure, according to research from advisor Capital Value.
The firm attributed the improvement to the ECB's interest rate cuts, the rising value of owner-occupied homes, and increased investments by housing associations.
Compared with last year, more transactions over €100 mln have been recorded so far in 2024. In 2023, there were only three transactions of this size, while in 2024, there have already been five. Private investors took the largest share (41%) of total volumes, followed by housing associations (32%) and institutional investors (20%).
Of the total volume, 44% (€2.2 bn) was invested in new-build homes. While this represents an increase of 41% compared to the year-earlier period, it still falls short of the government's goal of reducing the housing shortage in the Netherlands, Capital Value said.
Some 8,800 new rental homes can be realised in the coming years with the €2.2 bn invested in new-builds, while more than 40,000 per year are needed to meet the government's targets for 2030, the firm said.
Housing associations are currently the biggest investors in new-build housing, accounting for 46% of investments, followed by Dutch pension funds (38%). International investors make up only 2%, well below their historical share of 26%. ‘This is a missed opportunity as investments from international investors complement those of Dutch investors and they often acquire larger projects,’ Capital Value said.
Based on a continued recovery, the Dutch residential market is set to reach a total transaction volume of around €7.5 bn for 2024, comparable to levels seen in 2021.
However, investments in new-build will not be sufficient to combat the housing shortage, said Thijs Konijnendijk, head of research at Capital Value: ‘It remains necessary to critically examine ways to improve the investment climate for new rental housing. The reduction of the transfer tax to 8% by 2026 is not sufficient and is a classic example of “too little, too late”: the reduced rate will already be overtaken by rising construction costs and inflation before its implementation in 2026.'
He added: 'The rest of the fiscal landscape, including the tax on real estate shares, the earnings stripping measure, and corporate tax, will also need to be evaluated to make the Dutch residential investment market more attractive to international investors, Dutch pension funds, and housing associations in the Netherlands.’
