Bouwinvest Dutch Market Outlook 2024-2026: less capital inflow Dutch pension funds and growing housing shortage

The Dutch real estate capital market has seen a number of significant changes. As elsewhere in Europe, rising interest rates have led to negative capital growth and faster write-downs on property values, with any recovery only expected from 2025 onwards. Institutional investors have seen a shift in capital allocation, with less allocation to real estate and a growing reliance on foreign capital flows, due to reduced inflows from Dutch pension funds. These trends are expected to result in lower investment volumes in the short term.

Housing shortage
The housing shortage remains a major challenge in the Dutch real estate market. The drivers of this shortage include the increase in the number of households and the slow development of new-build homes. And this housing shortage could increase even further due to a number of factors, including current building procedures, which are causing significant delays in the development of new homes. Some investors are now reconsidering their residential investments in the Netherlands, which may lead to significant discounts on large portfolios, along with opportunities for other investors.

The healthcare real estate market is also undergoing a transformation. This is partly due to the ongoing ageing of the population and the fact that many healthcare institutions are changing their views on real estate ownership. This sector plays a significant role in providing suitable (senior) housing and other amenities.

Sustainability
Bouwinvest has also noted a growing emphasis on sustainability in the real estate sector. This is particularly notable in the office market, where we are seeing a rise in demand for high-quality and sustainable office space. We see that sustainability and flexibility are becoming increasingly important to both real estate investors and users. The impact of sustainability (and specifically climate adaptation) on property valuations is also increasing.

Outlook
Despite the current challenges in the Dutch real estate market, Bouwinvest expects new investment opportunities to emerge in 2024. The fundamentals look good for several real estate sectors. 

If you would like any additional substantive information on the developments described in the outlook, please contact Jeroen Beimer, Head of Research at Bouwinvest.