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Message from the Director Dutch Residential Investments

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Message from the Director Dutch Residential Investments

The Residential Fund is a long-term investor, with clear targets on the strategic pillars quality, affordability and sustainability and we made progress on all these fronts in 2020. This was despite the dramatic social and economic impact of the Covid-19 pandemic and the government measures taken to contain the outbreak. This showed once again how resilient the Residential Fund’s high-quality portfolio is in the face of even the most extreme of crises. Of course, it helped that the Dutch economy was in good shape before the outbreak. In addition, public and private sector organisations responded effectively and most companies able to switch to remote working adapted rapidly to the new situation. Thanks to this and government support measures, the pandemic had far less impact on the economy than initially feared in the spring. However, even with the early signs of economic recovery and the ongoing roll-out of the vaccine, the Dutch economy is very delicately poised and the outlook for the immediate future is still highly uncertain.

The residential sector was one of the least affected by Covid-19. House prices continued to rise throughout the crisis, driven by low interest rates and a growing housing shortage, partly due to a slowdown in construction. This is why both Bouwinvest and the government believe the construction of new homes remains a top priority. The affordability of homes could become even more urgent if we see a rise in unemployment rates or if the Dutch economy dips into recession. However, the residential sector continues to perform strongly, and we expect this to continue in the future, driven by growing demand for (new) homes and continued strong interest from investors.

The Residential Fund’s response to the crisis was an immediate uptick in our engagement with tenants and clients. We stepped up our communications with tenants, to keep them abreast of the latest developments and engage with those hardest hit to reach payment arrangements, a measure that has luckily been fairly limited so far. The Fund also established open and transparent communications with our clients, to share with them the impact of the various scenarios on the Fund’s portfolio and projected returns. Very importantly, we worked with our peers and the IVBN to come up with ideas on how to deal with issues we all faced. This included the likes of rental lenience, limited annual rent increases and the best way to make public spaces Covid-19 proof.

At the start of the pandemic, we forecast negative returns for 2020, and 2021 in the worst-case scenario. However, our portfolio has proven remarkably resilient in the face of the crisis and our full year returns were only slightly lower than our pre-Covid-19 plan. 

Despite market disruption, we once again made a number of high-quality acquisitions. We acquired the Binck Blocks project in The Hague, which includes a large number of mid-rental segment apartments, 190 highly sustainable homes in the Elements project in Haarlem and 146 homes in the mixed-use Oostenburg project in Amsterdam. In 2020, we kept our focus on the acquisition of properties that are fully in line with our long-term strategic criteria, in terms of product/market combinations, our risk/return standards and their location in the focus areas of our core regions, with a specific focus on the Holland Metropole region. 

In 2020, we once again made solid progress on the sustainability front. We continued to improve our tenants’ customer journey through the roll-out of our tenant portal. This is a digital environment for information, requests and complaints, together with a tenant monitoring system, which will help us streamline and improve our tenant services. And we continued to work on our Paris Proof roadmap, a collection of measures that will help us make our portfolio net-zero carbon by 2045. These efforts paid off in 2020, when we improved our Global Real Estate Sustainability Benchmark (GRESB) score to 88 points and were awarded our first GRESB 5-star rating. This puts the Fund in the top 20% best-performing funds participating in the GRESB global benchmark survey. We also teamed up with the city of Utrecht to launch a project to encourage people living in government-regulated homes to switch to affordable private sector homes in the Rachmaninoff complex.

The Fund has built up a strong portfolio of high-quality and sustainable homes and this has once again proven highly resilient, even in the face of extreme economic uncertainty. The recent crisis also confirmed that we have a well distributed portfolio. Our focus on affordability and our core regions, as well as our strategic exposure to the higher rental segment, enabled us to keep our returns at a healthy level during the worst economic crisis in over a decade. This crisis also revealed just how important it is to have a stable team of professionals, able to adapt and work in constantly changing circumstances.

I would like to take this opportunity to thank our clients for their continued trust in us and our strategy. And of course, I want to thank our team for their flexibility and determination in dealing with constantly changing circumstances. And for new levels of collaboration that enabled us to anticipate and respond to the latest developments. Our team kept our tenants and our clients front of mind at all times and were constantly on the lookout for the best solutions for everyone. All of this, without losing sight of their normal day-to-day work. It is thanks to them that we emerged so strongly from what was an exceptionally difficult year. 

Michiel de Bruine
Director Dutch Residential Investments