In the column A phone call with... we have a conversation with an expert about a current event related to economy, (responsible) investment, pension and income. This time: Robert-Jan Foortse, head of European real estate at APG, on the recent investments in affordable housing in the Netherlands for ABP.
On June 17, 2024, pension fund ABP announced the establishment of the “Dutch Essential Housing Venture,” a partnership with U.S. real estate company Greystar. The venture is investing 420 million euros in the construction of 1,500 affordable rental housing units in the Randstad and cities beyond, starting with the construction of 780 apartments in Leiden. The Dutch Essential Housing Venture is targeting renters with essential occupations, including teachers and police officers, as well as retirees. The aim is to rent at least two-thirds of the apartments in the regulated and middle rental segment (maximum rent of 1,200 euros a month). Foortse is responsible for the deal, which is being carried out by APG on behalf of ABP.
Why is this collaboration specifically focused on renters with essential occupations?
Foortse: “These people are currently struggling in the Dutch housing market. They earn just a little too much to qualify for social housing, but not enough to take out a mortgage to purchase a home. So, this group is falling between the cracks, yet it represents a significant part of ABP’s participant base. Our client likes to make attractive long-term investments, preferably investments that have a positive impact on the lives of its participants. The venture with Greystar is characteristically an investment that meets those criteria.”
The VVD, among others, fears that the new rental legislation will make residential rentals unprofitable and landlords will therefore sell their properties. Is this fear justified?
“I think so. This fear is also widely expressed in the real estate market. With all the measures that are being taken, residential investments are simply becoming less profitable. When the rent goes down on an existing project, combined with the transfer tax and interest deduction limitation, it becomes unprofitable for real estate investors to rent out properties. So if the new rent bill is passed by the Senate next week, it is likely that many investors will sell their properties.”
How will the new rent bill affect the Dutch Essential Housing Venture's investment returns?
“It will have less of an effect there. When we were analyzing this project, the content of this bill was already known. So we had already included it in all our analyses. It looks like the bill is going to be passed by the Senate next week. If it isn’t, we will go back to the drawing board. There would be a little more room for a higher rent. But that increase would be limited, because it has to fit within ABP’s commitment to keeping rents affordable.”
This collaboration is starting with an investment of 420 million euros. Do you have any follow-up investments in mind already, and if so, what is the nature and scope of these?
“The first project of this venture with Greystar will be the construction of 780 apartments in Leiden. To fully invest that 420 million euros, we are currently looking at a second, third and fourth project. In Leiden, construction will begin in the third quarter, but it will be 2027 by the time people can move into those apartments. It is our intention, once that 420 million is allocated to projects, to commit an additional sum to this venture. As far as we are concerned, the Dutch Essential Housing Venture will continue to grow.
Looking further into the future: ABP has indicated that it wants to have five billion euros invested in Dutch housing in the middle rental segment by 2030. To achieve that, we announced a venture with Bouwinvest last year, in addition to the partnership with Greystar. We are also currently in advanced discussions with two similar parties, with whom we intend to launch two more partnerships of this kind. We expect to make announcements on these in the second half of 2024.”