German investments in Dutch residential property indicate turning point
BNP Paribas REIM Germany has acquired a portfolio of 265 appartments worth €40 mln in the Netherlands on behalf of the Luxembourg SICAV of a German pension fund.The properties are based in the conurban known as Randstad and have been sold by AMVEST.
While the purchase is BNP Paribas REIM Germany’s first investment in Dutch residential real estate, it indicates a growing interest of institutional investors in the Dutch property market.
The Dutch market is characterised by a relatively large rental sector and property prices have declined sharply since 2007. Yet according to NVM, the Dutch Association of Estate Agents, property prices have increased by 1.2 percent in the first quarter of 2014.
At the same time, significant structural problems of the Dutch property market remain. As the Dutch Central Bank DNB highlighted recently, about one third of Dutch mortages are currently ‘under water’, their resell value is below the value of the mortage.
Nevertheless, the demand for high-quality living accomodation is set to increase, BNP Paribas REIM Germany predicts therefore above-average returns. Reinhard Mattern, chairman of the board of management of BNP Paribas REIM Germany explains:
“In Germany, our investors’ room for manoeuvre in acquiring properties with a satisfactory return is becoming ever more restricted due to continued high demand. At the same time, however, real estate investments are one of few investment opportunities that are also attractive at a time of low interest rates. In this environment, we have to identify and establish long-term alternatives.” He also stressed that he anticipated further deals as a consequence of the recent purchases.
This view is shared by other institutional investors. As the Dutch daily Het Financieele Dagblad reports, Alpinvest and CVC Capital have also recently purchased residential real estate from ASR Real Estate, suggesting that there may be a turning point in the Dutch property market.