Residential occupier market
The residential sector seems largely immune to the Covid-19 crisis and resulting economic recession. We expect house prices to continue to rise in 2021, albeit modestly, mainly due to low interest rates and the persistent housing shortage in the Netherlands. The demand in the mid-rental segment will continue to outstrip supply. Demand from international students and expats will continue to see a temporary decline, the latter affecting mainly the higher-end residential rental segment in the larger cities.
We expect consumers to attach a higher premium to more space or an extra room (i.e. for working from home) and sufficient outdoor space. It is likely that we will see an acceleration in the trend of families leaving the centres of larger cities for surrounding municipalities in search of more (affordable) space. Even prior to the Covid-19 outbreak, an increasing number of families were moving out of the larger cities. However, we expect urban areas such as those in the Holland Metropole to remain attractive to many target groups in the long term. Moreover, there is an increased awareness and demand for healthy living concepts (e.g. focus on more ‘green’, circular materials, climate adaptation, healthy lifestyle).
Residential investor market
The residential sector will remain attractive for investors due to the strong demand and lagging supply. Affordable homes in urban areas are particularly attractive as an investment opportunity. We expect continued strong performance for the residential sector, as long-term fundamentals and expectations are favourable, especially for the affordable, mid-market segment. On the other hand, further government regulation may have a negative impact on the short-term investment climate and investment opportunities may well be scarce.
Residential Fund plan
The Residential Fund has a clearly defined strategy of controlled growth and optimisation based on the three pillars of quality, sustainability and affordability. We firmly believe that the residential sector will continue to offer good long-term investment opportunities in core regions with strong economic and demographic fundamentals. The Fund's plan is to increase its invested capital to € 7.8 billion by year-end 2023. The Fund will achieve this through positive revaluations, targeted acquisitions of high-quality assets, investments to keep our assets up-to-date and fit-for-purpose and the divestment of assets that no longer meet our strategic requirements. The optimisation of the Fund’s portfolio covers a whole range of aspects, from improving the overall quality of the assets, making them more sustainable, increasing the number of affordable homes, maintaining our high occupancy rate, improving tenant satisfaction and introducing innovations in our homes and in the services we provide.
We believe that we can only generate long-term stable financial returns for our investors if we take the societal impact into account in every decision we take. Our focus is on the city of the future and we aim to create real value for life by investing for the long term in a responsible manner. The Residential Fund wants to invest in thriving urban and suburban areas that are attractive now and will continue to be so in the future. Liveable cities are inclusive places, where people can live, work, recreate and spend their time. We want our portfolio to reflect that inclusiveness, which is why we are looking to increase the number of affordable, mid-rental segment homes in our portfolio. In addition, we aim to reduce the environmental impact of our portfolio, striving for a net-zero carbon, nearly energy-neutral and climate-resilient Paris Proof portfolio before 2045.
The pandemic will leave its mark on the real estate markets. Many developments that had already been initiated before the pandemic accelerated during the crisis. At the same time, we are convinced that once Covid-19 measures are lifted, people will want to travel and meet each other again. With its long-term investment scope, the Fund focuses on adding value for our investors, tenants and stakeholders by continuing to invest in attractive living and working environments.
Amsterdam, 22 maart 2021
Bouwinvest Real Estate Investors B.V.
Dick van Hal, Chief Executive Officer and Statutory Director
Rianne Vedder, Chief Financial & Risk Officer and Statutory Director
Mark Siezen, Chief Client Officer
Allard van Spaandonk, Chief Investment Officer Dutch Investments
Stephen Tross, Chief Investment Officer International Investments