Investment Update: fragile recovery on real estate markets

Real estate markets are showing slight signs of recovery. For instance, real estate values seem to stabilise in the first quarter of this year. However, the recovery is still fragile, writes Casper Hesp, Director Investment Management at Achmea Real Estate, in the foreword to the new Investment Update. Investment volume is still low and government bond yields are rising slightly again now that the ECB seems to be waiting longer with interest rate cuts.

"In real estate, it is important to keep a close eye on the occupier markets," says Hesp. "These are in unprecedented good shape." In retail markets, consumer confidence is growing, rental levels have shown a stable picture for several quarters. In addition, demand for residential and healthcare real estate is unprecedentedly high, strongly driven by the current housing shortage. This strong demand will result in highly predictable stable direct returns for investors.

The housing shortage is also a social problem. This is also why the Affordable Rent Act (‘Wet Betaalbare Huur’) has been under discussion since 2022. This law, which has now been passed by the House of Representatives (‘Tweede Kamer’), regulates housing with rents of up to around 1,150 euros. Subject to early approval by the Senate (‘Eerste Kamer’), the law will take effect on 1 July 2024.

However, the Senate has already extended the Nijboer Act until 2029. This limits annual rent growth at the lower of the development of the CPI+1% or CAO wage development+1%. @Kes Brattinga discusses the consequences in detail in Investment Update's Focus.

Hesp: "We certainly don't think the rent legislation is perfect, but we welcome the end to uncertainty. This creates stability within the sector and allows new capital to be raised to get housing construction going again. This is badly needed to reduce the housing shortage."

INVESTMENT UPDATE 2024 Q1