According to the research report ‘Spotlight Residential 2020: The Netherlands’ by international real estate advisor Savills, the share in residential investments within the total investment volume will further increase in 2020, by reason of this submarket having a very solid basis to withstand the COVID-19 crisis. Savills does expect the total residential investment volume for 2020 to be lower than in 2019.

The continuing investor interest is mainly driven by the solid foundation on the residential market. In particular, prompted by trends such as urbanization and individualisation, the housing shortage will continue to increase, peaking in 2024. COVID-19 may induce an even further increase of the housing shortage due to the standstill of building projects.

According to Bas Wilberts, Head of Residential & Hotel Investment at Savills in the Netherlands it is evident that, especially in uncertain times, investors are looking for an investment product with a low risk profile. After all, people will always need a roof over their heads. An example that investor confidence in the housing market is still high in 2020 can be seen in the sale of the Amber portfolio in April 2020, the largest transaction in residential property of 2020 in the Netherlands so far. Heimstaden acquired this portfolio, comprising over 2,000 homes for a price of € 375 million, from Patrizia.”

Demand from the investment market is still high. This can also be illustrated by the fact that the furnished apartments within the niche market continue to attract interest from investors, according to the 'Spotlight European Serviced Apartment Market’.  However, there is a general sense of caution on the market in this period, resulting as yet in lower investment volumes and smaller investment deals.

The report also mentions a number of government policies that may affect the interest of investors in the Dutch residential market, such as the maximization of the rent increase for medium-rent, the purchase protection for owner-occupied housing, and maximization of property value under the Valuation of Immovable Property Act (WOZ).

Ronald Koemans, Associate Director Residential Investment bij Savills in the Netherlands, notes that for the first time in a long time, we see rents in large cities falling - as a result of (temporary) falling demand from expats and tourists (AirBnB), although the average rent in the Netherlands is still rising above inflation. A possible risk that may follow concerns price decreases in the owner-occupied housing market. As a result, investors will produce less high returns when housing complexes are let, making ‘uitpond’ financing (sale of rented property) less attractive. This may affect the initial yields which the investors are prepared to pay. Falling prices also have a negative effect on new developments, which does not benefit the housing shortage. With the demand in the rental market continuing to be so high, this serves as a good alternative to continue to let the rental property. As a result, I expect gross initial yields, which now stand around 4% for prime residential complexes, to stabilize rather than significantly increase.

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