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CBRE investor remains confident in the housing market.

Published on 14-05-2020
Real estate advisor CBRE Nederland observes that homes with an investment volume of € 2 billion will continue to be the most popular real estate investment in the first four months of 2020, also during the corona crisis. Based on current investor demand, it is expected that the investment volume of the housing market may even show some growth this year.

Investors continue to have an interest in residential investments. Despite a drop in investment volume of 35.4% compared to the first four months of 2019, this period included an exceptional transaction of € 1.4 billion. Regionally, Amsterdam and Rotterdam in particular had a strong start to 2020 with record volumes, rising to € 575 and € 200 million respectively.

March and April were particularly strong months with transactions of several large residential portfolios, with the largest transaction comprising € 375 million. Residential transactions also contrasted well with the full real estate investment volume, particularly in April when residential investment accounted for nearly two thirds of the total volume.

Sentiment remains stable
The positive investment sentiment does not seem to be disturbed by the corona crisis. Multiple housing transactions took place from offer to completion in April. In addition, there are no significant differences in “bid and ask price” with previously completed transactions. This indicates that buyers view homes as a crisis-proof investment.

“CBRE Netherlands still sees many ongoing transactions that will be completed in the coming weeks and months. We do see that sometimes it is decided not to bring projects to the market yet, but to take them further in planning. That ultimately makes those propositions more attractive to investors. In conclusion, the strong fundamentals and stable character of the housing market are expected to ensure that demand for residential investment in the long term will continue to be high and may even rise, ”said Alexander Buijs, Senior Director Residential Capital Markets at CBRE Netherlands
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Persistent tightness
The outlook for the residential investment market remains positive, according to CBRE Netherlands. The still increasing demand remains for the time being greater than the supply on the housing market, with shortages especially in the large cities. In addition, despite a recent increase of several tens of basis points, mortgage interest rates are still historically low.

However, the corona crisis is causing problems in construction. Although production does not come to a complete standstill, delays are to be expected. According to the EIB, the number of building permits issued is also expected to drop to 48,000 this year, far below the target of 75,000. This ensures that the shortage on the market continues and the housing shortage will continue to rise.

Rent versus buy
However, unemployment is rising due to the corona crisis and a sharp decline in consumer confidence is visible. This will affect the buying market in particular, as these developments will reduce both buying opportunities and willingness to buy. This makes the rental segment more interesting for investors. Households are expected to move to medium-expensive and affordable rental housing in the short term, which will therefore remain attractive to investors. However, should unemployment rise sharply, an effect on the rental housing market cannot be ruled out.

“Falling construction production and the influx from the purchase to the rental market will increase the demand for affordable rental housing. However, the financial feasibility and thus feasibility of new construction projects is still under pressure, in particular due to the level of the current construction price. Cutting back on the build quality is not the solution, because there is a need for good quality homes for the long term. There will be even more emphasis on developing the right home product that meets the ever-growing demand, ”said Robbert Arkenbout, Director Residential Capital Markets at CBRE Netherlands
 
Source, Vastgoedmarkt, 12th of may, de redactie