colliers residential investment market 2014

8/10/2019 Colliers Residential investment market 2014

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Residential Investment Markethe Netherlands | 2014 | Investments


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2 Residential Investment Market | 2014 | Colliers International

2007 2008 2009 2010 2011 2012 2013 2014

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

9%

5%

11%

15%

18% 18%

20%

29%

0%

5%

10%

15%

20%

25%

30%

35%

RESIDENTIAL INVESTMENTVOLUME SKY HIGH

Te demand from investors for rental houses substantially

increased in 2014. In the first three quarters of 2014 the

investment volume reached a level of 1.7 billion. Tis is

already the highest level in the past seven years.

Investment volumes in other real estate segments remained

stable compared to the previous years. Over the last few years

the investments in residential real estate is getting increasingly

important for the total investment volume in real estate. Tis

increased demand has a few causes: the decreasing prices of

houses caused a decrease of the vacant value while the rental

rates increased.

Residential real estate is getting increasingly

important for the total investment volume in

real estate

Investors are hoping for a good direct return on investments as

well as an increase in rental income. Te Netherlands is seen as

a relatively stable economy within Europe, resulting in a limited

risk exposure for foreign investors.

Values x 1.000.000

Residential investment volume (2007-2014)

Residential investment volume Percentage of total investment volume
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44%

37% 98%

1%

19%

FOREIGN MONEY ISA GROWTH ENGINE

With 56% of the investment volume in 2014 there is a strong foreign presence on the Dutchresidential investment market. Tis strongly differs from previous years when the Dutch

residential investment market was a predominantly Dutch market with institutional and

private investors.

In 2014 theres a rise of foreign interest, the three largest

transactions all have foreign buyers. Te foreign parties are

mainly interested in large portfolios.

With 6.5% of the number of transactions they have a share of

more than half of the investment volume. Te foreign buyers are

mainly Anglo-Saxons and Germans.

Te largest transaction this year is the announced acquisition

(subject of approval by Ministry of Housing) of the Vestia-

portfolio (577 million), purchased by Patrizia. Another trend

visible this year is the return of institutional parties, they mainly

buy newly built complexes. Te right supply of these complexes

is limited.

The Netherlands

Germany

United Kingdom

USA

Top 5 residential investments 2014

LOCATION NUMBER OF HOUSES PRICE BUYER COUNTRY

Nationwide , ,, Patrizia* DE

Nationwide , ,, Round Hill Capital UK

Nationwide ,, Aventicum Capital UK

Nationwide ,, Quadrigo NL

Heerlen and Rijswijk ,, Joint venture between Solidiam and Andantino NL

Inner circle: 2007 - 2013

Outer circle 2014

(2013 = 100)

Nationality buyer

*Deal with Patrizia and Vestia is subject to approval by the Ministry of Housing
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90

100

110

120

130

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015 2020 2025 2030 2035 2040

90

100

110

120

130

DECREASING VACANT VALUE OFHOUSES LEADS TO HIGHER DEMANDTe increasing interest in the housing sector is partly caused

due to the decrease of the vacant value of houses. Te average

transaction price decreased with approximately 15% since 2008

while the rental rates have been rising. Tats why it provides a

possibility of an increase in returns on the rental income and the

recovery of the value of the house. Furthermore it is also possible

now for housing associations to sell entire housing complexes at

once, which is a great opportunity for foreign investors to gain

foothold on the Dutch housing market.

In 2014 the average transaction price is at the same level as in

2004. Te rental rates of dwellings has increased in this period.

In 2013 and 2014 this rise was even higher compared to the

previous year. One of the main reasons is the fact that since

2013 housing corporations are allowed to raise rents extra for

households which earn more than the allocated boundary for

social housing.

A risk often mentioned for the housing market is the aging

population. Until 2040 the Dutch population will still increase

with 6.5% to approximately 17.8 million. Besides the number of

households will increase even more with 14%.

Tis is mainly caused by the fact that the number of single

person households will increase (34%). Tis rise willpredominantly consist out of single elderly people. Tis provides

relatively risk free opportunities for investors looking to buy

apartments and elderly homes. However this largely depends

on the location of the housing complex because one out of

four municipalities will face a decreasing population in the

forthcoming decennia.

Most of these municipalities are located in the South and

the North of the Netherlands. Hence there is a high risk of a

vacancy of houses in these regions. On the contrary especially

the large cities in the Randstad will experience an increase of

the population. Furthermore university cities outside of the

Randstad will have a growing population. Almere and Utrecht

will have the largest increase, while there will be just a modest

growth in Rotterdam.

Growth of population and number of households creates opportunities

ransaction price [index]

Households [index]

Rental rates [index]

Population [index]

Source: NVM and CBS (2004 = 100)

Source: Primos (2003 = 100)
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Het nieuwewoonwaarderingsstelsel

Door het nieuwe woonwaarderingsstelsel wordt de

attractiviteit van niet-geliberaliseerde woningen beter

meegenomen in de huurprijs. In de nieuwe regelgeving, die

onder voor-behoud van parlementaire goedkeuring medio

2015 ingevoerd zal worden, worden de schaarste punten

vervangen door een stelsel waarbij extra huur gevraagd kan

worden op basis van de WOZ waarde.

Deze nieuwe puntenwaardering wordt deels gebaseerd

op de WOZ-waarde per vierkante meter en deels op de

absolute WOZ-waarde van de woning. Voor investeerdersis dit interessant omdat de WOZ waarde in grote lijnen

overeenkomt met de (leeg)waarde. Daarnaast wordt de

algemene prijs per WWS-punt met 3,8% verlaagd. Door

deze veranderingen zullen de maximumhuren op landelijk

niveau gelijk blijven, op regionaal en lokaal niveau

zullen wel veranderingen optreden waarbij in betere

woonwijken hogere huren gevraagd kunnen worden.

Prijzen voor woningcomplexen die nu nog in een schaarste

gebied liggen, maar een relatieve lage WOZ-waarde

hebben zullen minder WWS-punten krijgen, hierdoor

dalen de huurinkomsten en daalt ook de waarde van het

woningcomplex.

Dit kan andersom ook zorgen voor stijgende

huuropbrengsten en een stijgende waarde. Afhankelijk

van de samenstelling van de portefeuille van beleggers

op de Nederlandse woningmarkt kan dit een negatieve

dan wel positieve ontwikkeling van de waarde van hun

woningportefeuille betekenen. Landelijk gezien kunnen

de huurprijzen dan wel gelijk blijven, voor beleggers

kan dit nieuwe woningwaarderingsstelsel een grote

impact hebben. Zo is het ook mogelijk dat de maximale

huur daalt tot onder de liberalisatiegrens, hierdoor

zouden verhuurders gedwongen worden om een

verhuurdersheffing te betalen.

Te new housingevaluation system

As a result of the new housing evaluation system the

demand for non-liberalised dwellings will be better

represented in the rental rates. In this new regulation,

which subject to parliamentary approval and has to be

effective mid-2015, the scarcity points and the residential

environment points will be abolished and replaced by a

system in which extra rent can be asked based on the value

for the purposes of the Valuation of Immovable Property

Act (WOZ). Tis new valuation system is partly based on

the WOZ value per square meter and partly on the absolute

WOZ value.

Tis is interesting for investors because the WOZ value

matches to a large extent to the value of houses with vacant

possession. Furthermore the general price per housing

evaluation point will be lowered with 3.8%. Because

of these changes the maximum rents remain the same

nationally, however there will be changes on a regional

and local scale especially in sought-after neighbourhoods

the asking price will increase. Housing complexes which

are located in areas with high demand and low supply, but

which have a relatively low WOZ-value will get less housing

evaluation points. Tis will cause rental incomes to drop as

well as the value of the complex as a whole.

On the other side these new regulations can also cause

an increase in rental income and an increasing value of

the whole complex. Depending on the composition of the

portfolio of the investor this can be a positive or a negative

development for the value of their housing portfolio.

Nationally the rental rates will stay the same, however for

investors this new housing evaluation system can have a big

impact. It is also possible that the maximum rent will drop

below the liberalization threshold, causing the owner to pay

a land lord levy.

FURTHER INCREASE INRESIDENTIAL INVESTMENT

VOLUME EXPECTED

It is probable that the investment volume willsubstantially increase in the remaining part of 2014,several portfolios are still for sale. o this date theannounced transaction of Patrizia is the first largesale of complexes by housing corporations to aninvestor.

Tere have been more transactions between housing

corporations and the private/institutional sector, but

these were relatively small. Te announced sale of the

Wooninvesteringsfonds portfolio (3,848 houses) is an example

of the large sales that will be expected in the forthcoming

months. Another large portfolio which is expected to be sold isthe former Lips portfolio (976 houses). In the upcoming years it

is expected that several housing corporations will sell housing

portfolios. For an investor the houses which can be liberalized

are the most interesting. In the end this is only possible with a

relatively small part of the portfolios of housing corporations.

It is also financially more attractive for housing corporations to

sell their possessions individually.

The value of houses with vacant posession

will increase and there will be less need to

sell houses.

It is expected that in the upcoming years the housing prices

will rise again. Te value of houses with vacant posession

will increase and there will be less need to sell houses. Tis

will result in a retreat of mainly foreign bargain hunters from

the Dutch housing market. Tis will be filled up by Dutch

institutional parties which are willing to pay higher prices.
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Copyright 2014 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made toensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consulttheir professional advisors prior to acting on any of the material contained in this report.

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 15,800professionals operating out of more than 485 offices in 63 countries. A subsidiary of FirstServiceCorporation, Colliers International delivers a full range of services to real estate users, ownersand investors worldwide, including global corporate solutions, brokerage, property and assetmanagement, hotel investment sales and consulting, valuation, consulting and appraisal services,mortgage banking and insightful research. Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world.

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Primary Authors:

Kes BrattingaHead of Research | Research+31 (0)20 540 55 [email protected]

Thijs GuineResearch+31 (0)20 540 55 [email protected]

Contributors:

Sander Halsema | Marketing

Colliers International | AmsterdamBuitenveldertselaan 51082 VA Amsterdam | The Netherlands

TEL +31 (0)20 540 55 55

colliers residential investment market 2014

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