Dear stakeholders,
Residential real estate is hot right now, but we see few signs that might bear out fears of overheating in hotspots like Amsterdam. The Residential Fund certainly had a good year, with a total return of 15.6%, which was above even our high expectations. This was thanks at least in part to our past and present focus on areas with a solid economic and demographic outlook. Plus the fact that despite fierce and growing competition we still managed to make a number of solid acquisitions, without any concessions to our high quality standards.
The flip side of the booming residential market is the growing problem of affordability that is affecting more and more people. Public and private sector players will have to work together to help alleviate this problem and set targets for new developments. So while we are very happy with the performance of our portfolio, we are also looking very keenly for solutions to the problems of supply bottlenecks and the difficulties people are facing in finding suitable and affordable homes. After all, these imbalances – as demand vastly outstrips supply – will result in even greater problems in the future if they are not addressed quickly and effectively.
Local authorities are now taking measures, including maximised rent increases and starting rents and restrictions on the sale of rental properties. This is creating a new environment for investors, some of whom may be more reluctant to invest until we have a clear picture of the impact of these and other measures. However, we firmly believe in inclusive urban environments that offer high-quality homes to people at every income level now and in the future.
One thing that is clear is that the shortage of residential properties will continue for the next few years. We will therefore continue to press for an increase in plan capacity, while protecting the green heart in the Randstad region and beyond. This is also one of the key drivers behind Holland Metropole, a public-private collaborative initiative to promote the four-city Holland Metropole region, improve transport links and create smaller urban centres between the major cities, relieving pressure on those cities and creating truly liveable environments right across the region. There is a real and growing need for liberalised sector homes, and more specifically mid-segment rental homes, which will continue to be our primary focus.
We managed to make 18 acquisitions valued at € 300 million last year. Most of these acquisitions were outside Amsterdam, as prices in the capital are currently often too high to meet our investment criteria. Other very popular cities, like Utrecht, are now following suit and prices are rising and margins are narrowing very quickly. This is why are increasing our focus on opportunities in smaller cities, like Haarlem, Eindhoven and other cities with a very positive economic and demographic outlook. And it is also why we are in constant talks with local authorities and other residential market players across the country to find solutions to this burgeoning demand. And we did indeed manage to make some solid acquisitions outside the capital city last year. Highlights included the unique Little C project in Rotterdam and a major project involving 323 new-build homes in Utrecht and across the province of Brabant. We were less active in Amsterdam last year, although we did acquire the striking Het Dok project, increasing our presence in the upcoming Amsterdam North district.
All in all, we are positive on the Dutch residential market and we are convinced that we will continue find and acquire assets to add to our portfolio in the future. As at 31 december 2017, we have a total of 17 investors and the commitment of our anchor investor bpfBOUW, so we have the resources, we have the expertise and we have the network to optimise our portfolio and generate healthy returns long into the future.
All that is left now is for me to thank our investors for their continued faith in our strategy and all our employees for their hard work and commitment to Bouwinvest in 2017.
Dick van Hal
Chairman of the Board of Directors