The rental residential sector is likely to be the main driver of value growth for real estate investors in 2025, says Jeroen Beimer, head of research at Holland Metropole partner Bouwinvest.

“Inflation and the accompanying interest rate policy have significantly impacted the real estate market in recent years, leading to declining valuations,” says Jeroen. “Inflation has decreased somewhat but the inflation level in the Netherlands remains relatively higher than in our surrounding countries.”

The current global geopolitical situation makes the economic outlook uncertain, and Jeroen expects that this will dampen the anticipated recovery in the Dutch real estate market. In addition, ECB interest rate cuts are not a certainty, he says, and for the Dutch real estate market, this could mean that initial yields will see little movement.

“The primary driver of value growth will therefore be rental growth, particularly in segments with strong demand and limited supply, such as the housing market,” says Jeroen.

“Real estate, with its stable cash flows, has shown itself to be a good hedge against inflation in recent years, and we expect this to remain the case. For a long-term investment horizon, 2025 could be a good ‘vintage year’ for real estate investments. We also anticipate a gradual increase in investor interest.”

Although Beimer expects only limited interest rate cuts, he does see opportunities for yield compression in niche segments of the housing market that are currently underdeveloped. Sectors such as student housing and private residential care, he says, show above-average growth potential and therefore offer an attractive risk-return profile.

“From the demand side, the Dutch housing market, including healthcare real estate, has strong underlying fundamentals and should be attractive to investors,” he says. “At the same time, the Dutch housing market is not unique in this regard. It is a European phenomenon, and the Netherlands is competing for capital with other European markets.”

One problem facing the Dutch market is that of uncertainty about regulations and unfavorable tax measures. The Netherlands needs to build approximately 1 million homes by 2034, and this is going to cost some €400 billion in capital.

“Our message to the national government is clear: ensure consistent policies and an investment climate that is attractive to capital, both nationally and internationally,” Beimer says.

Photo: Bouwinvest 

Dutch housing minister Mona Keijzer has published new rules to speed up residential housing development in the Netherlands, including placing restrictions on the right to appeal and making it easier to build in rural areas.

The aim of the measures is to ensure that enough affordable housing is built, that procedures are shorter, and that everyone has an equal chance of getting a home, the minister said.

The legislation, Keijzer said, will “provide legal instruments for government and local authorities to work more quickly with the private sector in building both sufficient and the right kind of housing. It is also important to ensure that people with an average income have the opportunity to find an affordable home in every local authority area.”

Cutting red tape

Current planning rules state that applications for new residential locations should be supported by evidence that there is a need for housing in that particular place, limiting development outside current town and city boundaries.

This procedure requires additional research, time, and costs and will therefore be scrapped, the minister said, adding that this will make it quicker and easier to build outside existing urban areas.

In an effort to cut down on protests, protesters will only be allowed one legal appeal instead of two in projects of more than 12 units, and the ruling must be made within six months, the minister said.

30% social housing

The new rules also state that two-thirds of new builds in the Netherlands should be accessible to people on low and average incomes and that 30% should be social housing on a regional rather than a project basis. This was agreed at December’s housing summit between the government, developers and investors and marks a shift in the current project-based percentages.

The rules also make it easier for homeowners to build a “granny flat” on their property without a permit and simplify the regulations for sustainable construction.

Affordability a challenge

“The measures are a step in the right direction, but still more can be done,” said Dutch developers’ organisation Neprom in response. In addition, affordability remains a challenge, Neprom said.

“The agreement that two-thirds of new developments should be classed as ‘affordable’ is becoming increasingly difficult to realise,” Neprom said. “What does help is that planning procedures are now being made uniform and agreed at a regional level.”

Photo: Depositphotos.com

Holland Metropole member Bouwinvest plans to invest €1 billion in housing in the Netherlands over the coming years to increase the supply of affordable and sustainable homes.

“We are able to do this thanks to our shareholders, the Dutch pension funds,” says Paul van Stiphout, Fund Manager Dutch Residential Investments. “Capital can be fickle, but a stable, high-value shareholder base allows us to plan for the future.”

Shareholders seek a return on investment of 5.5% to 7% by developing sustainable homes in the mid-market sector and just above, Paul says. “We can improve affordability in the long term by increasing housing supply. We will also sell older properties to fund new construction. We’ve agreed at least 50% of our capital will go to new builds, ensuring growth in the total housing stock.”

One million new homes

However, additional capital is needed to fully address the housing shortage in the Netherlands. The government aims to build one million new homes, an effort requiring around €400 billion in investment.

“This is significantly beyond our capacity alone,” Paul says. “Dutch pension funds have already heavily invested in the market. To meet the target, new capital must come from foreign investors, including pension funds in Canada, Germany, and Switzerland.”

The Dutch housing market has attracted foreign investors due to its transparency and maturity. Public-private partnerships are common, and institutional investors play a crucial role. However, competition from other European markets facing similar shortages presents a challenge in securing foreign capital.

European problem

“Our tight housing market is a European phenomenon and we are competing with European markets with cities like London, Berlin and Madrid,” Paul points out. “If these markets have beter investment conditions than we have, then the capital is more likely to move there.”

Housing minister Mona Keijzer has committed to reducing bureaucratic hurdles and planning requirements to speed up construction. She has also allocated €2.5 billion to infrastructure improvements, flood risk management, and expanding electricity grid capacity.

In addition, the transfer tax on residential property sales, currently 10.4%, will be reduced to 8% in 2026 to encourage investment.

“We call for a stable, stimulating long-term investment strategy and a competitive tax regime,” Paul says. “We must have the equal conditions for all investors, domestic and foreign. We need capital, and international players must feel welcome. The government must enhance the investment climate to make this possible.”

In total 82,000 homes were added to the Dutch housing stock last year, including new build, repurposing old buildings and subdividing existing units, according to new Dutch housing ministry figures.

The total is below the government target of 100,000 new homes a year and the dip is likely to continue in 2025, housing minister Mona Keijzer said. However, from 2026, when government measures begin to take effect, production will grow and from 2027, the target will be met, the minister said.

According to housing ministry statistics, plans for 1,021,000 new homes have now been drawn up.

Slashing red tape

“The measures we are now implementing will bear fruit in a couple of years,” the minister said. “But every step forward is an advance. Our main focus is to remove obstacles to new construction projections, such as local authority red tape, and make better use of existing buildings.”

In December the minister hosted a housing summit with developers, investors, construction firms, local and regional governments, and housing corporations who all signed an agreement aimed at speeding up the development of new homes.

Developers’ organisation Neprom was among the signatories of the deal. “The time for sitting back and waiting for problems to resolve themselves is over,” said Neprom chairman Ronald Huikeshoven. “We have all made difficult decisions to meet each other halfway and look at how things can be done.”

Affordable housing pledge

The signatories to the deal have committed to ensuring that two-thirds of all new developments at the regional level will be “affordable,” and that, in time, 30% of the new properties will be social housing, with rent caps and income requirements for tenants.

This marks a shift from the previous government’s emphasis on ensuring affordable housing in every project. The government has also pledged additional funding to cover the immediate costs of expanding the social housing supply, provided that local councils contribute 50% of the funding. This may well prove a stumbling block, given central government is planning to cut local authority funding.

At the same time, minister Keijzer acknowledged that uncertainties remain around infrastructure issues that need to be addressed, including electricity grid congestion, nitrogen emissions, green spaces in and around cities, and flood risks. She has set aside €2.5 billion to help ease these problems.

Standardisation and less red tape

The signatories have also agreed to standardise rules and regulations, meaning that local councils can no longer impose their own rules on top of those set by the national government. The government itself will no longer introduce regulations that go beyond those agreed at the EU level – a decision which led the minister to earlier tear up the requirement that all new property includes bat and bird boxes.

However, developers are still concerned about the challenges of delivering enough affordable housing and say the financial coverage remains uncertain. “We hope that the agreements made… will provide enough leverage for our members to invest in housing construction in a way that makes economic sense,” Huikeshoven, who also chairs developer AM, said.

Holland Metropole members had earlier expressed concerns about the investment climate and the challenge they face to attract capital to invest in affordable housing.

Holland Metropole partner Achmea Real Estate has launched a new impact fund aimed at acquiring older rental homes and making them more energy-efficient and sustainable.

The Achmea Dutch Residential Impact Fund (ADRIF) is the first of its kind in the Netherlands and aims to reduce the number of rental homes with an energy label of D or worse. Approximately one million rental properties in the Netherlands fall into this category.

The funds will be used to purchase older, poorly insulated rental homes and make them more sustainable. These will primarily be housing complexes owned by large investors and housing corporations looking to sell part of their portfolio, or private investors with reasonably large portfolios. The fund will not purchase homes from individual owners.

Pension funds

Achmea has invested €50 million into the fund and invited other institutional investors, such as pension funds, to participate, with the goal of reaching €1 billion by 2030.

“Together, we face an enormous challenge in making existing homes in the Netherlands more sustainable,” said Achmea executive board member Daphne de Kluis. “We need to act quickly, and this requires considerable investment. Our investment is just the first step.”

Achmea plans to make the homes Paris Proof. The roofs, façades, and floors will be insulated, and HR++ glass will be installed throughout the properties. Additionally, gas-fired central heating systems will be replaced by electric heat pumps or connections to district heating schemes.

Cost to tenants

These measures, Achmea states, will lead to significantly lower CO2 emissions per home. Tenants will also benefit from more comfortable homes and significantly lower energy bills.

Tenants will experience a slight increase in rent to cover the costs, but when energy bills are taken into account, their total housing costs will remain the same or decrease slightly, provided energy consumption and household size remain unchanged.

“This means that the project will not only benefit the climate but also contribute to keeping housing affordable,” Daphne de Kluis said.

Annual return

The fund aims for an average annual return of 6% for participating investors, comprising direct rental income and the expected increase in property value. This, according to Boris van der Gijp, co-chairman of Achmea Real Estate, will enable institutional investors to contribute to meeting the Paris climate targets “while achieving an appropriate financial return.”

Holland Metropole partner Bouwinvest and two of the Netherlands’ largest pension funds launched their own social impact fund in December 2023 to boost the stock of affordable and care-related homes in the Netherlands.

The civil service pension fund ABP, one of the largest funds in the world, has committed €250 million, while the building sector fund bpfBOUW has contributed €150 million to the partnership. The focus of the Social Impact Real Estate Partnership is on housing for groups in the Netherlands who are currently struggling to find a home.

Across Europe, cities are grappling with a pressing issue: how to accommodate population growth, lifestyle changes, and grow in a managed, sustainable way. A special panel session organised by the Holland Metropole alliance at the Expo Real real estate fair in Munich focused on the challenges and possible solutions.

There was almost total unanimity at the session on the first day of Expo Real that affordable housing is one of the very top priorities for European cities. However, opinions diverged when it came to whether the solutions already exist or need to be created and developed over the next five years. A significant number of participants expressed doubt that current systems are sufficient, arguing that new approaches must be developed if the problem is to be addressed.

At the heart of the discussion was the critical need for collaboration between government bodies and private investors, with neither side able to solve the problem alone. Public and private entities, panelists and delegates said, must align their interests and work together to develop innovative solutions.

Regulations

Gemma Kendall, head of multi-family homes investments at JLL argued that regulatory consistency is often more important to investors than the specifics of the regulations themselves. When rules change overnight, it becomes difficult for investors to plan long-term, which ultimately hampers the development of affordable housing. The panel agreed that consistent, long-term regulatory frameworks are essential for attracting and retaining investment in affordable housing.

Despite the complexities, there are encouraging examples of cities that have successfully aligned public and private interests to deliver affordable housing.

Jace Tyrell, CEO of Opportunity London, illustrated this point by presenting London’s approach to affordable housing. With a population approaching 10 million, London is under immense pressure to increase its housing supply. Tyrell highlighted a £5 billion housing fund proposal that would be shared by 10 to 15 pension funds. The aim is to deliver 20,000 discounted market rent homes across the city. This initiative demonstrates how the public sector can de-risk investments by fostering partnerships that provide attractive opportunities for private investors.

Eindhoven

In Eindhoven, the city has partnered with national government and private companies, securing over €4.5 billion in funding to support housing and infrastructure development. Deputy mayor Stijn Steenbakkers emphasised that Eindhoven’s success in addressing its housing challenges is due to private companies like ASML understanding their vested interest in ensuring that all workers, highly skilled professionals but also blue collar workers, can afford to live in the city.

In Madrid, the “Plan Vive” initiative has attracted international investment through a partnership between public authorities and private developers. A Japanese equity group, has collaborated with local entities to build affordable housing projects across the city, which were oversubscribed 13 times upon completion. Since its adoption in 2021, more than 4,500 affordable homes have been delivered or are underway. This demonstrates how, with the right incentives, public-private collaborations can meet housing demand while delivering returns for investors.

Investable products

The panellists also highlighted the importance of building investable products that meet the investors’ requirements. So far, the creation of international residential portfolios across Europe has been one tool for investors to diversify their portfolios but the differences in national regulatory environments are a barrier to greater investment.

To attract investment, cities need to focus on making their markets more accessible and investor-friendly. This includes streamlining planning processes and offering financial incentives, such as those available in Germany or in Spain. By reducing uncertainty and offering clear pathways for investment, cities can encourage private capital to flow into affordable housing projects.

The session also underscored that solving the affordable housing crisis requires more than just financial investment. Successful partnerships, like those seen in Eindhoven and Madrid, are built on trust, mutual understanding and shared goals. This trust is essential for projects that require significant upfront investment and long-term commitment, particularly when it comes to large-scale urban development.

Recommendations

Looking ahead, the conference participants offered several recommendations for addressing Europe’s affordable housing crisis.

1. Public authorities need to be proactive in creating conditions that attract investment, and in providing regulatory certainty.
2. At the same time, developers need to be open to new forms of collaboration that go beyond traditional development models and do not focus only on returns.
3. Expanding public-private partnerships and creating development corporations can help align the interests of all stakeholders and foster the trust necessary for successful housing projects.

Panelists: Stijn Steenbakkers, Jace Tyrell, Gemma Kendall, James Wythe (Aviva Investors), Michael Fink (Catella Investment Management)

Moderator: Tim Moonen

Report: Borane Gille and Greg Clark

Investment in innovative new construction materials is a key part of boosting sustainability in the real estate sector, and that is leading to some interesting partnerships, says Boris van der Gijp chief executive of investor Achmea Real Estate.

“The impact side of investments is a very important part of our strategy and that shows itself in the choices we make when it comes to investments,” says Boris, in an interview ahead of October’s Expo Real property fair in Munich.

In terms of ESG, the company has made great strides in making its entire portfolio more sustainable and not just by just by selling off the unsustainable parts. “We are making thousands of homes more sustainable, together with our partners. And as part of that, we are continually looking at advances in bio-based construction materials.”

One project Boris is particularly proud of is a joint programme with the farmers’ pension fund to investigate how hemp can be used in the construction process. It is, he says, particularly appropriate given the need to make farming itself more sustainable. The hemp itself is grown in the Netherlands and used as an insulation material in housing built on behalf of the farmers’ fund.

Bio-based materials

Farmers in the Netherlands are being urged to change working practices and to focus less on livestock farming which can be heavily polluting. “Hemp is not only interesting in terms of developing more bio-based materials, but it offers a new way forward for farmers,” says Boris. “What could be better?”

Another example of innovation in construction is partly funded by PMT, the light engineering pension fund. It is focusing its efforts on timber-based construction, and Achmea and the pension fund jointly sponsor a professorship at Delft University concentrating on the potential offered by timber.

“This is where you see how pension funds and we as investors can work together,” Boris says. “They challenge us to take an extra step and we then challenge them. Of course, not every pension fund goes this far, and it is always a question of finding a balance between the social impact and the financial returns.”

Social impact

The company has also developed its own tool to measure the social impact of its portfolio so that it can take concrete steps to improve it. “The social impact monitor allows us to look at hard facts and the actual sums for each unit,” he says. “That allows us to set aside extra funds to make improvements. Take loneliness, for example. This is a big issue but it is something we can work on. We can create larger areas where people can meet each other, for example, or employ a concierge who will also organise events or help to set them up.”

The results of these efforts will then be seen in the social impact monitor, “so we can see what our investments have delivered,” he says. “We are not only looking for financial returns. Environmental and social returns are important too. This tool allows us to show our investors that we are putting their money to good use. Ultimately, of course, we are doing all this for pension funds and for people who have a pension, as well as for people who are looking for affordable housing.”

You can meet Boris van der Gijp and the rest of the Achmea team at the Holland Metropole stand at EXPO REAL (Messe München) from October 7 to 9. Hall 2, stand 130.

Photo caption. Timber is an increasingly popular construction material. Photo: Depositphotos.com

The Holland Metropole alliance is heading for the Expo Real trade fair in Munich with a record delegation made up of 37 cities, investors, developers, architects and other organisations closely involved in the Dutch real estate market.

Senior government officials and Utrecht mayor Sharon Dijksma are among the participants who will be taking part in sessions on solving the affordable housing challenge and making urban growth work.

This year much of the Holland Metropole focus is on attracting investment, given the new Dutch government’s restated commitment to building 100,000 new homes a year. The government has pledged to cut back on red tape and speed up procedures and is organising a major summit on housing later in 2024 in an effort to make sector-wide concrete agreements.

The new government has also pledged to continue to pressure the European Commission to take a speedy decision about expanding the options for state support in affordable home construction by both housing corporations and the private sector.

“This really is the right time to step into the Netherlands as a foreign investor,” says Ronald Huikeshoven, managing director of area developer AM and new chairman of Dutch developers association Neprom. “The government is ready, developers are ready and the councils are ready. Everyone is combining their strengths to focus on affordable, residential area development.”

Experts estimate the some €400 bn needs to be invested in affordable, rental housing and that is a tremendous amount of money, says Mark Siezen, chief executive of real estate investor Bouwinvest. “It is a massive challenge to attract capital, but together we are committed to working on improving the investment climate. It is a shared public private mission and a very necessary one.”

The Dutch housing market is an attractive one to foreign investors because it is highly transparent and mature. In addition, public private partnerships have always been the norm and there is an important role for institutional investors.

About Holland Metropole

Amsterdam, Rotterdam, The Hague, Utrecht and Eindhoven are thriving cities in their own right. As an alliance, they form one of the most competitive regions in the world. Meet the Holland Metropole partners at the Holland Metropole stand in Hall A2, 130, or join one of their events in the busy conference line-up.

Monday October 7

10.00 – 10.50 Solving the affordable housing challenge: the roles of cities, government and investors. Panelsession moderated by Greg Clark, Exhibitor Stage, Hall C2, booth 430. More info!

13.30 to 14.50 The New European Bauhaus: Affordable Housing, Energy Efficiency, Construction. Panel session with Robert van Asten (The Hague). EXPO REAL FORUM, hall A2, booth 450. More info!

15.00 – 15.40 Urban Expansion and Redevelopment in the Century of Cities: Renewal of Port Cities. Panelsession moderated by Greg Clark, with Rotterdam deputy mayor Chantal Zeegers. DECARB Forum, Hall A3 TB51. More info!

16.00 – 16.50 Making Urban Growth Work: Affordable Housing. Panelsession moderated by Greg Clark. DECARB Arena, Hall A3 TB51. More info!

Tuesday October 8

10.15 – 11.00 Remaking Cities for the new world order: Keynote introduction. Panel session moderated by Greg Clark, with Utrecht mayor Sharon Dijksma. DECARB Arena, Hall A3 TB51. More info!

11.15 – 12.00 Remaking Cities for the new world order: Retrofit and Re-Use. Panelsession moderated by Greg Clark, with Eindhoven deputy mayor Stijn Steenbakkers. DECARB Arena, Hall A3 TB51. More info!

11.30 – 12.00 Introduction of the book ‘The Architecture of Ageing’ by de Architekten Cie. First edition will be handed to Utrecht mayor Sharon Dijksma. Holland Metropole stand, Hall A2, 130.

13.00 – 14.30 Regional Innovation Valley Utrecht: Heart of health. Hall A2, room A21 More info!

15.00 – 16.30 Metropolitan areas in transition to achieve real social value. Hall A2, Room A21. More info!

For more information, contact: Annemieke | annemieke@hollandmetropole.com