Government reforms, coupled with cyclical market drivers, are helping to open up Europe’s residential property markets to cross-border institutional capital, PropertyEU’s Residential Briefing in Amsterdam heard on Wednesday.
Government reforms, coupled with cyclical market drivers, are helping to open up Europe’s residential property markets to cross-border institutional capital, PropertyEU’s Residential Briefing in Amsterdam heard on Wednesday.
‘Governments, such as in the Netherlands and the UK but also Poland and Sweden, are introducing incentives to attract foreign institutional capital to the residential sector,’ Xavier Jongen, fund director at Bouwfonds Investment Management, told the briefing, which was held at the Provada property fair.
‘Governments recognise that there are big risks associated with public housing and they now want to take away the asymmetries in the market and make more room for international institutional money,’ Jongen said.
Recent legislative reforms in the Netherlands mean that the country’s social housing corporations can now sell off large portfolios, which are attracting strong interest from foreign investors. The Vestia corporation is working to sell 6,600 homes, while another housing fund, WIF, announced this week that it planned to dispose of nearly 3,900 housing units.
Foreign investors are already jostling for deals. On Tuesday, UK-based Round Hill Capital announced it was buying Dutch residential assets in a deal worth €180 mln, while German investor Patrizia and Swiss-based Corestate Capital are also scouring the market.
Kirk Lindstrom, managing director of Round Hill Capital, said the Dutch market offered a ‘similar risk-return equation’ to the German market, which it entered in 2007. ‘We’re looking at opportunities [in the Dutch market on a case-by-case basis,’ he said. ‘Residential is a relatively safe business but you can easily get into a declining situation if the market fundamentals change.’ He declined to put a figure on the size of the portfolio Round Hill aimed to build in the Netherlands but noted that it would be ‘hard to get up to Deutsche Annington levels’ in a reference to the German investor's 174,000-unit portfolio.
‘Now is the time to step into the Dutch [residential property] market,’ Klaus Weber, head of transactions at Patrizia Immobilien and a member of the panel, said. Government reforms, coupled with a housing shortage, low inflation and population growth in the major cities made the Dutch market an attractive bet, he said.
Geert de Nekker, director of international real estate at Syntrus Achmea Real Estate & Finance, cited lack of good product as a potential obstacle. For this reason, the company is turning to development ‘to build quality product in the right spot’.