Measures undertaken by the Dutch government to boost investment in residential property may encourage an upturn in interest from international investors, according to a panel discussion at Expo Real in Munich this week.

Left to right: Tom Leahy, Tinka Kleine, Saskia van den Bronk, Hans Broere and Thomas Heijdendael

Years of unpredictable government policy, as well as high taxes and bureaucratic procedures have dampened international and domestic demand for residential real estate but that, the panel heard, is now changing.

The Netherlands has an estimated housing deficit of 5%, and the government's ambition is to create 100,000 new homes a year. New research highlighting the strong case for investing in Dutch real estate suggests it outperforms comparable residential markets in Europe and North America, delivering an annual total return of 10.5% between 2016 and 2025.

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The Netherlands' housing sector stands out in Europe thanks to attractive returns, high-quality stock and a strong focus on sustainability, Saskia van den Bronk, director of European investment at Bouwinvest told the panel. While the fundamentals are strong, she said, predictability is just as important as returns for long-term investors.

"Long-term investors look globally at where they can find residential markets with the right combination of returns, fundamentals and predictability. The Netherlands now has a real opportunity to attract more international capital."

Government action plan

 According to Tinka Kleine, senior director, private real estate, at Dutch healthcare pension fund PGGM, the new government focus marks a major turning point. "If the next steps help to normalise the situation, that should bring political risk down," she told the debate, organised by Real Asset Media.

The Dutch government has launched an action plan highlighting dozens of measures to speed up residential development over the next few years, and this, said Hans Broere, strategic advisor to the housing ministry, will give investors "a degree of consistency and predictability". The plan includes focusing on 26 large-scale developments with capacity for between 3,000 and 30,000 homes.

“This means that the national government… is very committed to implementing these projects,” he said. “We are looking for coordination with investors.”

Pension funds and corporate taxation

Housing minister Elanor Boekholt-O'Sullivan, who personally attended Expo Real, has also asked the tax department to simplify and update regulations covering corporate taxes for foreign pension funds. "That is one of the key things we are looking at," said Broere. "The next step is implementing the action plan and the promises we made."

While new regulation, including cuts in ownership transfer taxes, has had a significant impact on investor demand, the underlying strength of the Dutch economy continues to make residential attractive, Tom Leahy, executive director, MSCI Research & Development, told Real Asset Media.

"The Dutch residential market is one of the most established and institutionalised markets in Europe," he said. "Pension funds have been active there for a long time, and historically it has also been one of the most liquid markets."