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Netherlands
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News overview |
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Investment market for rented housing grew strongly in 2009 ‘The investment market for existing rented housing has grown by 20% in the past year. In 2009 the total investment volume was EUR 1.1 billion compared to EUR 900 million in 2008’, says Eddy Halter, deputy director of DTZ Zadelhoff. Following a sharp fall in prices at the start of 2009, by 10-15% compared to mid-2008, prices in the second half of 2009 remained virtually stable. Supply largely came from institutional investors. They increasingly accepted the lower price levels, which had a positive effect on the number of transactions. With regard to sales, institutional investors had a market share of 60% whereas corporations accounted for no more than 20%. On the purchasing side, private investors were in the majority at 70%. At the end of 2009, here too corporations had a market share of about 20%, but the number of purchases they made did fall. In 2008 corporations still accounted for more than 30% of purchases. The deteriorating financial situation in this sector as a consequence of corporation tax and the ‘Vogelaarheffing’ (government-imposed levy to be used to revitalize forty deprived urban areas), falling sales to private individuals and the impending ‘Europe Dossier’, which will increase corporation financing costs, are likely causes. High activity levels in the market for rented housing are partly due to the need of institutional investors to refresh their housing portfolio regularly. They are selling property dating from the 1970s and 1980s and then investing the proceeds in new buildings. Furthermore, they are relatively overweighted in property and had to improve their liquidity position in 2009.
Private investors, on the other hand, buy existing rented housing because of the attractive price levels, low vacancy risk and its tendency to keep in step with inflation. Eddy Halter adds: ‘Complicated investment products that are difficult to understand are out, and traditional bricks and mortar are back in vogue. Family homes in particular, built around 1980 with a rent of between EUR 600 to EUR 800 per month are highly sought after. Investors pay about 70% of the value when vacant or 17 to 18 times the rent.’ The market and its players changed considerably in 2009. The size of complexes sold is being reduced and buyers or potential buyers are increasingly small, locally active parties. A fine-meshed sales network is therefore extremely important in successfully selling residential property as an investment product. ‘The local businessman, a well-known figure in the neighbourhood, is then suddenly the surprising buyer of a block of 15 rented homes’, says Halter. Prices have now virtually bottomed out and supply is falling, both in a quantitative and qualitative sense. Many institutional investors have meanwhile stopped selling their existing housing portfolio. Private investors, however, are still clearly showing their desire to buy, and this may produce a slight rise in prices for good-quality property during the course of 2010. |
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