Demand for high-quality Dutch property assets 'far outstrips supply'
Care property as an asset class is to become as significant as the office and retail real estate sectors in the Netherlands, according to Dick van Hal, chief executive at the €6.7bn property investor Bouwinvest.
Speaking at the recent annual conference of IPE sister publication PensioenPro, van Hal said demand for high-quality real estate in the care sector far outstripped supply, and that there were still relatively few investors active in the market.
Previously, Bouwinvest – property investor for BpfBouw, the €53bn pension fund for the Dutch building sector – indicated that care property had “enormous” growth potential and said it had received a €300m investment mandate from BpfBouw.
Van Hal also noted that the market for rental residential property was becoming “very hot” on the back of a “race to catch up after the serious slowdown of building activity during the financial crisis”.
Non-regulated rental property in the Netherlands requires considerable investment in particular, he said.
Also during the conference, Nortbert Bol, managing director at Grontmij Capital Consultants, argued that there was room for Dutch institutional investors to increase their infrastructure allocations.
He pointed out that, worldwide, the target allocation of “mainly large investors” was 5%, while this figure was just 3% in the Netherlands.
He suggested smaller pension funds could also invest in infrastructure as a diversifier and overcome potential barriers, such as a lack of expertise, through co-operation.
He said he expected demand for sustainable-energy infrastructure investments to grow, “as this would generate proper returns whilst contributing to the social goal of fighting climate change”.
Responding to Bol’s presentation, Loek Sibbing, chief executive at the new Dutch Investment Institution (NLII), suggested political risk for investments in infrastructure projects could be mitigated by concluding “clear long-term agreements” with the government.
He said institutional investors had already committed approximately 50% of the required assets to the NLII’s recently launched investment funds for subordinated loans for small and medium-sized companies (ALF) and for corporate loans (BLF), before any actual loan had been placed.
The loans – to be distributed through banks – are expected to return 450 and 275 basis points in excess of the swap rate, respectively, according to the NLII.
Sibbing also indicated that the NLII was currently assessing 40 projects, including sustainable housing, thermal grids and schools, on their suitability to be placed together in €500m investment funds.
The NLII was established last year with the aim of attracting pension funds to invest in the local economy by linking supply and demand.