We are seeing a lot of opportunities arising and it gets us even more excited about investing in Dutch real estate. Below we elaborate on “WHY” and how we have aligned our portfolio strategy for the Dutch market:
1. The rental sector in inner cities is becoming a goldmine.
This is described in more detail in a recent analysis in Vastgoedjournaal, but in short: The new rental legislation is pushing a lot of rental properties out of the “free” sector (ie. uncapped rent) and into social rent (ie. rent controlled), resulting in much lower returns for the property owners. Many private owners are going to sell their rental properties instead of offering them in the rent controlled sector, and this will significantly decrease the supply in rental properties, causing rents in inner cities to continue to increase. The likely outcome is that good investment properties in the uncapped sector are going to increase sharply in value.
At BRXS, we specifically look for rental properties that are in the free sector or that we can keep in the free sector through minor renovations and energy label improvements. We feel very strongly on the future potential of this segment.
2. Invest where the shortages are
There is currently a huge shortage of student housing and this shortage continues to grow every year as not enough student houses are added, and the influx of (foreign) students continues to increase. Therefore, we at BRXS remain strongly committed to room rental properties that often bring a higher return, a lower chance of vacancy and have a good forecast for future years.
3. Cheaper acquisitions
Due to higher interest rates and new legislation, there are fewer buyers than before for investment properties. This allows us to be even more strict on quality requirements, return prospects and negotiate strongly. For example, our last few properties, we purchased below the taxation value.
4. General shortage of residential real estate in the Netherlands
The Netherlands remains a strong economy attracting a lot of businesses, expats and investments; that growth is going to continue and as a result a strong housing supply is needed. But despite the strong growth in the housing market over the last 10 years, there is still a shortage of more than 300,000 homes. That's huge! To close this shortage, the government is trying to increase the pace from 70,000 new homes to 100,000 new homes per year. Even if this is achieved (which does not seem realistic), the housing shortage will not be eliminated before 2030.
5. New legislations have no impact on BRXS
Other new legislations such as Box 3 and buyout protection have no impact on BRXS:
- The recent Box 3 adjustments have a negative impact for private investors who own their own property themselves, because you can no longer deduct the debts (mortgage) from the property value, resulting in a much higher reported return and taxes. But for investors who invest in real estate funds or through the BRXS platform, there is no impact; in fact, it becomes more fiscally interesting not to purchase properties directly yourself anymore, but to invest through a fund or BRXS.
- Buyout protection (owner occupancy obligation) only impacts owner-occupied properties where there is no rent yet. Again, there is no impact for BRXS as we focus on existing rental properties
Our newest property in Oosterpark (Amsterdam) is a good example of how we align our acquisitions with all the above trends and offer investment properties that are set for a strong future.
Of course in the future we will also look at other sectors and even abroad, but right now there are good returns and opportunities right under our noses and in sectors where we have a lot of experience. So it would be a shame not to capitalise on that.
