"Real estate is a local business. That is where the complexity starts"

Paul van Gent and Jasper Petit

Let's start with the why. What makes international diversification worth the complexity?
Paul van Gent: For bpfBOUW the starting point is always what an investment contributes to the long-term pension outcomes of our participants. International diversification is not a goal in itself. We use it to make the real estate portfolio more resilient, by reducing dependence on any single market, economic cycle or small number of investments.

That is also where the complexity starts. Real estate is fundamentally local. Regulation, rental markets, financing, valuations and sustainability requirements differ by country and often by city. So, you need to understand not only where you invest, but also with whom, and which risks you are taking. That is why we value active management: a global portfolio view, combined with proximity to local markets. Bouwinvest has built that platform for us over the years, with regional expertise and carefully selected local partners. It helps us identify opportunities and, just as importantly, recognise and manage risks early.

Jasper, how do you translate a pension fund's objectives into an international strategy?
Jasper Petit: It starts with the client's objectives and the role real estate should play within the broader portfolio. Risk appetite, return objectives, liquidity, ESG requirements, leverage restrictions, legal considerations and currency risk all shape the strategy.

From there we apply our investment philosophy. Paul's point about real estate being local is exactly why we believe international portfolios benefit from active management, and why we believe specialists generally do better than generalists. We build portfolios with specialist local partners in the markets and sectors we have conviction in, using a broad toolbox: private real estate funds, joint ventures and listed REITs, supported by our teams in Amsterdam, New York and Sydney. That combination of local expertise and flexibility is much harder to achieve through broadly diversified pan-regional funds.

Our pension fund heritage matters here. Many years of investing for bpfBOUW have given us a strong understanding of how institutional investors think and what they need from a long-term real estate partner. We are grateful that bpfBOUW is supporting us in this next chapter, as we open the platform to like-minded institutional capital.

Paul, that philosophy gives Bouwinvest a lot of room to manoeuvre. Why is that the right choice for a pension fund?
Van Gent: Because real estate markets are constantly changing. The most attractive opportunities shift across regions and sectors, and the best way to access them shifts as well. Sometimes that is a fund or a joint venture, in other cases listed real estate or a more specialist structure. The same applies to sectors. We have seen opportunities moving from more traditional areas into living, healthcare, student housing, data centres and other specialist segments.

That is why we deliberately give Bouwinvest a flexible mandate. Within our framework for return, risk, costs and responsible investment, they have the freedom to make active choices across regions, sectors and investment routes, and to select the right specialist partners where they see value. It allows the portfolio to respond to changing opportunities without changing the principles that matter to us as a pension fund.

Bouwinvest is active in direct, indirect and listed real estate. What does that combination add?
Petit: In short, we live and breathe real estate. Our roots are in managing real estate for more than 35 institutional investors. We invest directly in the Netherlands and through private and listed real estate internationally. That depth of specialisation helps us understand the underlying real estate, whatever the structure around it.

The three perspectives also inform each other. Listed real estate often provides earlier signals on changes in financing, demand and valuations. In 2022, those signals helped us anticipate the repricing that later came through in private markets. Our direct Dutch real estate expertise strengthens our underwriting abroad, for example when we apply healthcare knowledge developed in the Netherlands to investments in North America and Asia Pacific. Bringing those lenses together helps us challenge assumptions, select partners more rigorously, identify opportunities earlier and manage risk across the portfolio.



The international portfolio has outperformed its benchmark over several time periods. What has mattered most?
Van Gent: A consistent long-term investment strategy, first of all. We do not invest for short-term performance. The portfolio has to contribute to strong and resilient pension outcomes for our participants, and that requires diversification, discipline and a careful balance between risk and return.

Within that framework, Bouwinvest has had the flexibility to actively manage the portfolio. It is not simply about being broadly diversified. It is about identifying where the most attractive opportunities are and accessing them early, through strong local partners. That said, we do not take good past performance as a given. We keep looking critically at performance, risk, costs and whether the portfolio remains positioned for the long term.

Let's turn to where you see opportunity today: European Living.
Petit: The structural demand is clear, but Europe is not one residential market, and many institutional investors have struggled to gain access. Regulation, planning, taxation, operating models and tenant preferences differ significantly by country and often by city. Investors see the opportunity. The difficult question is where to start.

We were early in the sector. Managing a significant Dutch residential portfolio gave us the confidence to invest internationally, starting with German residential more than 15 years ago for bpfBOUW. Since then, we have invested across most major European Living markets. Being based in the European Union, with our largest office in Amsterdam, gives us an advantage here.

That fragmentation is exactly why we build the portfolio market by market with specialist local partners, rather than as one broad pan-European direct strategy. Investing directly requires your own organisation and real scale in every market, as we have in the Netherlands, and across six or eight European countries that would mean building six or eight local platforms. Working with partners gives us that local expertise and access from day one and lets us select the strongest specialist per market and per segment, while we retain control through approval and veto rights, governance and reporting. This becomes even more relevant as Living expands into operationally intensive segments such as student housing and senior living, where local market knowledge, operational capabilities and access weigh even more heavily.

And Asia Pacific, which many European investors find hard to navigate? Petit: We have always seen Asia Pacific as a strong region for performance and diversification for investors already active in Europe and the United States. It is a dynamic region with significant long-term growth potential, but it is also highly fragmented: regulation, market structures, currencies and transparency differ considerably from one country to the next. For bpfBOUW we have therefore focused on the region's established markets, such as Australia, Japan, Korea, Singapore and Hong Kong. They combine that growth potential with the market depth, liquidity, legal certainty and reporting standards a pension fund needs, and with local partners who can meet institutional requirements.

That fragmentation makes a broad pan-APAC approach difficult to execute well from a distance. It is why we opened our Sydney office and built the portfolio market by market, selecting the sectors and local partners that fit our investment philosophy. In many cases we remain actively involved, with approval and veto rights on acquisitions and disposals, while ensuring institutional-grade governance and reporting. That is how we make a complex and relatively hard-to-access universe investable for institutional clients: proven for bpfBOUW over many years, and now the foundation for serving other investors seeking diversified exposure to the region.

The platform is now opening up to other institutional investors. What does that have to deliver?
Van Gent: Scale and access. A broader multi-client platform can strengthen access to attractive investments, specialist partners and market opportunities for all clients. Bringing together like-minded institutional investors also creates efficiencies, and it sometimes gives access to opportunities that would not be possible at a smaller scale. What matters to us is that our own objectives remain fully reflected in our portfolio. That is the balance the model has to strike: the benefits of shared expertise and scale, with each investor still shaping the portfolio around its own objectives and requirements.

Petit: That is the design principle. Shared research, a shared partner network and shared access, but separate portfolios and separate mandates. We believe this will lead to better access, stronger investment decisions and better long-term outcomes for everyone using the platform.

Finally, Paul: what would you say to another pension fund organising its international real estate exposure?
Van Gent: Start with your own pension objectives, not with the market. What role do you want real estate to play in the overall portfolio? Is the priority diversification, stable income, inflation protection, sustainability, or a combination? Once that is clear, you can decide which regions, sectors and investment routes fit those objectives.

Second, take the specialist expertise seriously. Global diversification sounds straightforward, but in practice you need to understand the underlying real estate, the local market and the partners you invest with. For us it has been important to work with a manager that combines global portfolio oversight with strong local expertise, access to specialist partners, and rigorous selection and risk management.

And look for scale and flexibility together. International diversification can add significant value, but it requires a long-term perspective, discipline and the right capabilities. For bpfBOUW the guiding principle remains that every investment should contribute to good pension outcomes for our participants, with a careful balance between return, risk, costs and responsible investment.