NETHERLANDS - The ageing of the population, and the new financial assessment framework, or FTK, will lead to a considerable increase of pension funds’ investments in real estate, says the Dutch weekly Beleggers Belangen.
It expects a yearly investment of over €30bn in this asset class over the next few years. “More real estate will move to professional players from companies and investors for whom real estate isn’t a core business,” it said.
The FTK, which is expected to come into force as of January 1 for pension funds, will stimulate the appetite for real estate in the Netherlands. This is because accounting rules for real estate are less stringent than those for equities, it argued.
According to the weekly, the FTK takes into account a maximum decline in real estate values of 15% during hard times, whilst the comparative percentage for equity is 25%.
Of the €700bn of Dutch pensions assets, around 5% is currently invested in real estate - down from 10% in 1984, it added. Citing CB Richard Ellis and JP Morgan, it said European schemes have an average of 6.5% of their assets in real estate.
“The present ratio of one pensioner and four workers will have halved in 2050,” it said. “Several surveys however recommend a share of real estate of 15%, for enabling the pension schemes to match their changing liabilities.”