PropertyEU 2014 PROVADA preview

PROVADA CELEBRATES 10TH ANNIVERSARY WITH FOCUS ON CROSS-BORDER OPPORTUNITIES

International investors return to the Dutch market Dutch investors gain momentum abroad Oportunities in Dutch residential Strong demand and rising rents

Visit the International Day at Provada on June 4

European logistics 10.15 - 11.15 Aprisco Lounge. Hall 10

Germany

11.15 - 12.15 Aprisco Lounge. Hall 10

European residential 13.30 - 14.30 Aprisco Lounge. Hall 10

Netherlands

15.00 - 16.00 Real Estate Forum. Hall 9

PREVIEW INTERNATIONAL DAY PROVADA

Provada crosses the Dutch border Expert panels debate opportunities This year’s Provada highlights the range of opportunities the Dutch property market offers cross-border investors. After years in the doldrums, things are looking up and residential portfolios in particular are drawing increasing international interest.

The 10th Provada trade fair takes place at the RAI exhibition centre from June 3-5. In the 10 years since its foundation, the fair has grown into a key event for everyone involved in the Dutch property market, whether developer, investor, lawyer or real estate agent.

This year again Provada will host a special International Day for cross-border players, as an increasing number of international investors seek opportunities in the Dutch market and Dutch investors expand their activity in cross-border markets.

In 2013, people from some 20 different

Cor van Zadelhoff, founder of property group DTZ and member of the Provada board, says that in a digital age, it is even more important that people meet face to face.

‘We need to get away from the screens everyone hides behind and just talk to each other,’ he said at celebrations earlier this year to mark Provada’s tenth anniversary. ‘I would advise everyone to do business with people they know. And Provada is the platform to do just that.’

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‘We see growing interest from international investors - from China, Taiwan and Korea - and over 20 different countries will be represented.’

Peter Schreuter, managing director Provada countries attended the event, with delegates from Germany, Belgium, the United Kingdom, Luxembourg and Ireland topping the list. This year, says Provada managing director Peter Schreuter, there is also growing interest from further afield, with visitors attending from China, Taiwan and Korea.

Themes ‘Increasing our international programme is making it even more interesting for crossborder visitors to attend,’ says Schreuter, who has watched the number of cross-border investors and developers rise over the years.

‘We see growing interest from international investors, particularly in residential property.’ This year’s Provada event has three main themes: the redevelopment of existing property; creating a sustainable city; and cocreation – the process of working together to create a new living environment.

The main focus for international visitors is on June 4 with a full programme of Investment

Briefings organised by PropertyEU. The Investment Briefings will bring together leading experts from across Europe to discuss the outlook for key markets and sectors, investment opportunities, hot topics and the latest market trends.

These interactive sessions with market experts will focus on the investment outlook for Germany and the Netherlands alongside a focus on two key pan-European sectors: logistics and residential.

Internationally-orientated investors such as Patrizia, Goodman, Deka, Credit Suisse, IVG, CBRE Global Investors, Syntrus Achmea, Bouwinvest, KanAm Grund, Axa Real Estate and Wölbern Invest, as well as major Dutch pension funds (such as PGGM, APG and SPF) will be well-represented at the event.

The Dutch property market is currently in a transitional phase, says Provada’s Peter Schreuter. ‘There is light at the end of the tunnel and next year, will be an exciting one in terms of the Dutch property market.’

Trading in foreign places: Dutch investors gain momentum abroad Dutch developers, investors and financiers were hit hard by changes in the global property markets and many were forced into retreat. Some folded, some revamped their operations and some stuck it out and are now reaping the benefits.

The Netherlands is one of the most highly urbanised countries in Europe and this has spawned a number of leading developers specialising in mixed-use schemes comprising shopping centres, offices, housing and entertainment facilities.

‘Leading institutional players like pension asset managers APG and PGGM have led the way across Europe and the rest of the world.

They have pioneered new trends such as partnerships with local specialists and club deals with like-minded players who are leaders in their fields in other markets,’ says Judi Seebus, editor-in-chief of PropertyEU. These include, for example, APG’s joint venture with GIC and Westfield in the Westfield Stratford City mall and PGGM’s joint venture in student housing in the UK. Industrial Bouwfonds REIM is even looking to wind farms as a new source of investment as the Dutch pioneering approach gathers momentum abroad.

Damian Harrington, regional director of research at Colliers International, also sees opportunities in the industrial and logistics sectors for Dutch investors. ‘The industrial and logistics sector is proving to be the most dynamic real estate sector in EMEA. A com-

‘The industrial and logistics sector is proving to be the most dynamic real estate sector in EMEA. A combination of new infrastructure, technological advancement, near­­ shoring and e-tailing is driving change and opportunities across the region. Damian Harrington, regional director research at Colliers International bination of new infrastructure, technological advancement, near-shoring and e-tailing is driving change and opportunities across the region,’ he says. This has resulted in ‘a significant number of joint venture transactions into major logistics platforms in the last 18 months’.

Redevelopment is a key theme in many developed countries in western Europe and the Dutch are renowned for their ability to integrate new and existing facilities. Examples, says Seebus, include Multi, MAB, CBRE Global Investors (formerly ING Real Estate).

Others like Redevco and Vastned have high street expertise due to their background (C&A) or strategic focus (Vastned).

Research by PropertyEU earlier this year showed that the recovery in retail development is fully under way across Europe as the real estate sector started to find its feet again

Top Dutch deals abroad

Pension funds Cross-border investment and partnerships are key themes in the European real estate industry. US investors are scouring Europe for opportunities and Multi is a Dutch example that has fallen victim to this trend. Last year private equity giant Blackstone obtained control of the Gouda-based company via the acquisition of the company’s debt. Nevertheless, Dutch pension funds are finding their feet as alternative lenders and beginning to make inroads into several other countries.

propertyeu research

asset/location

buyer

vendor

1

Investment in GRIP residential fund

APG

Grainger

186

Eurocommercial Properties

Vastned

105

2 Val Thoiry mall in Toiry, France

and Dutch developers such as Corio and Multi are up there with the best of them in revamping Europe’s high streets. New developments, such as Corio’s flagship Nave de Vero store close to central Venice, are examples of the Dutch approach to innovative retail.

price €mln

3 Housing portfolio in Germany, Bouwfonds REIM the Netherlands and Denmark

Danish pension fund/other

65

4 Three Residential buildings Bouwfonds REIM in Germany and Denmark

Wohnbau Blumenwinkel Bautrager GmbH

56

5 Five high street units on Cours de L’Intendance, Bordeaux, France

private investor

47

Vastned

Wednesday June 4 10.15 - 11.15 European Logistics 11.15 - 12.15 Germany 13.30 - 14.30 European Residential Aprisco Lounge. Hall 10 See page 60 to register

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The Netherlands is back in business

Foreign investors return to Dutch market The Dutch property market has had its share of troubles over the past few years. But a string of interesting deals and renewed focus on residential thanks to housing market reforms show the Netherlands is once again being targeted by international investors.

Foreign developers and investors returned to the Dutch real estate market in 2013, making up 40% of total investment volume – the highest share since the start of the financial crisis.

And market watchers point to two potential listings on the Amsterdam stock exchange as evidence of increased investor confidence in a recovery in the Dutch property market.

With the stock exchanging buzzing, foreign investors are on the hunt for Dutch bargains across the property spectrum. For example, US investor Karlin Real Estate is on the verge of acquiring an Amsterdam area office building in the Netherlands in its first foray into the Dutch property market.

Patrizia Immobilien is also seeking to gain a presence in the Netherlands. And as German dominance of Amsterdam’s Zuidas business district intensifies, Hamburg-

based German Union Invest is paying around €244 mln for a third property in the area in a year.

Office portfolios The office sector in particular has shown signs of improvement, and the largest recent deals have concerned office portfolios, Johan Kamminga, CBRE GI’s research and investment analyst for the Netherlands, points out.

‘But while the office segment is considered to be attractively priced, demand for retail estate has fallen behind,’ Kamminga says. ‘Retail was considered a safe haven throughout the crisis but the risks associated with the Dutch retail market, such as the impact of e-commerce, have helped make investors more cautious.’

The Dutch retail market has been hit by high vacancy rates, falling rents and rising yields

Top international investors in NL

country

asset/location

volume €mln

1

US

Blackstone / Logicor

252

2

CZ

PPF Real Estate

187

3

LU

Victory Advisors

176

4

FR

AXA Real Estate

157

5 UK Delin Capital Asset Management (DCAM)

130

6 US

Goldman Sachs (with OVG of Rotterdam)

120

7

Union Investment RE

102

DE

8 NO NBIM

100

9 DE HIH - Hamburgische Immobilien Handlung

65

10 CA

50

Granite

propertyeu research/top 100 investors

‘The absence of liquidity meant capital values collapsed to a greater extent, particularly in the secondary office sector. As a result, opportunities are potentially better than some other European countries.’

Michael Walton, CEO of Rynda Property Investors Top Dutch deals by international investors

propertyeu research/top 100 investors

asset/location

buyer

vendor

1

Office portfolio, various cities

Blackstone

CBRE Global Investors

price €mln

165

2 Grand Hotel Krasnapolsky, Amsterdam

AXA Real Estate/NHA NH Hoteles

157

3 Six offices, mall in various cities

PPF Real Estate

AXA Real Estate

140

4 Eight office buildings, various cities

Goldman Sachs/OVG

CBRE Global Investors

120

5 Pulitzer Hotel, Amsterdam

Riverland

The Blackstone Group

105

6 Atrium office building, Amsterdam

Victory Advisors

Avestus Capital

95

7 Logistics portfolio, various locations

Logicor (Blackstone)

Syntrus Achmea Real Estate

87

8 Office portfolio, various cities

Victory Advisors

UBS Euro Value Added RE Fund 85

9 Akzo Nobel HQ, Amsterdam

Union Investment RE Dura Vermeer

82

10 Siemens HQ, The Hague

PingProperties

77

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Siemens Nederland

in recent years and the divide between good and poor location is bigger than ever. In terms of its investment potential, retail has been extremely weak over the past few years, but nevertheless, several deals so far this year indicate change could be on the way.

According to a recent report by Dutch investor Syntrus Achmea, there is still a healthy demand for the best locations in the four big cities of Amsterdam, Rotterdam, The Hague and Utrecht.

Wednesday June 4 15.00 - 16.00 Netherlands Investment Briefing Real Estate Forum. Hall 9 See page 60 to register

Special report highlights opportunities for international Investors

Dutch residential investments: Strong demand and rising rents The Dutch government is working to restore the balance between rental housing and the owner-occupied sector, opening up new opportunities for investors. With house prices falling and rents going up, the return on housing investments has improved considerably.

Dutch investors have long been active in domestic housing, but until now few foreign investors have entered the market. Now house prices are going down and the shortage of housing is forcing up rents, the Dutch residential sector could offer a new portfolio option to international fund managers.

A report commissioned by eight large institutional fund managers, including CBRE GI, Syntrus Achmea and Bouwinvest, and published earlier this year, shows the housing market in the Netherlands now provides attractive investment opportunities for both national and international investors.

This is the first time such detailed research has been carried out on the Dutch housing market. Existing research tended to focus on commercial real estate investments like the office and retail markets.

The report shows that in particular there is increased demand for non-rent-controlled housing – that is properties with a monthly rent of over €700 – because of EU income restrictions. At the same time, housing corporations, which account for almost onethird of Dutch housing stock, are being forced

‘All the lights are turning green in terms of Dutch residential investment as the government rewrites the rules and the market is bottoming out.’ Dick van Hal, CEO, Bouwinvest by government policy to divest their higher rental properties and focus on social housing.

There are four main reasons why the Dutch market may now be worth a look.

• Residential investments show relatively good performances • Cross-European investments can offer good portfolio diversification • The pricing of residential investments in the Netherlands is improving • Investment opportunities in the Netherlands are growing New homes House prices in the Netherlands have fallen some 20% since the start of the economic crisis in 2008 and are only now (in the sec-

ond quarter of 2014) showing some signs of recovery.

In addition, Dutch housing supply is very restricted and the amount of construction has plunged. Figures from the national statistics office CBS show the number of permits for new houses reached a record low of 26,000 in 2013. This is 30% down on 2012 and 70% down on 2008. This could potentially lead to housing shortages over the next decade and certainly makes it unlikely house prices will fall much further.

‘The Dutch market is characterised by the presence of a large, professional institutional investment market with a long track record in investments in residential portfolios,’ says Robbert van Dijk, fund manager of CBRE GI’s

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Dutch Residential Fund. ‘The current existing housing shortage in the Netherlands is expected to increase even further in the next decades due to the downturn in construction and positive demographic growth.’

The fund managers’ report points out that the Netherlands is one of only six European countries to have any tradition of residential property investment. And those who do invest in residential have traditionally focused on the non-regulated market.

The research shows that residential property investments show ‘reasonably good’ returns, with only moderate risks.

European comparisons Compared with office and retail property, residential gives a total return of 8.6%, far outstripping office (7%) and only marginally behind retail (9%). Retail, however, shows a higher return risk ratio.

Compared with the other five countries, the Netherlands, Germany and Switzerland post

‘Most of the let residential units are characterised by a higher vacant value which offers ample opportunities for partial sales. This provides landlords in the Netherlands the opportunity to capitalise on the indirect return and renew their housing stock by reinvesting the proceeds from these sales.’ Robbert van Dijk, manager CBRE GI’s Dutch residential fund

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returns of between 5% and 6%. This is below the 10% recorded in France, Sweden and the UK, but still reasonably good. In addition to providing steady cash flow, Dutch residential property also gives investors a moderate inflation hedge, and is better than other types of assets on offer. From a portfolio point of view, residential property investment is attractive.

Of course, much is down to the particular conditions on the Dutch property market. In the Netherlands, the rental market has two strands – the regulated sector targeting low income households with rents of up to €700 a month and the non-regulated sector. Regulated housing accounts for 88% of the rental market – or some 2.7 million homes. Rents are determined by a complicated system whereby points are awarded for age, amenities and local facilities.

Rent increases are also subject to a strict formula. In the non-regulated market, rent levels can be set freely.

At the moment, institutional investors own around 16% of Dutch housing – or some 140,000 dwellings. According to Dutch government figures, around 45% of institutional investor housing stock is regulated.

This balance is also shifting as new housing developments focus on the non-regulated sector. ‘In addition, most of the currently regulated dwellings have the potential to be non-regulated, so when new tenants come in they can increase the rent,’ the report points out.

The Dutch economic situation is also showing signs of improvement after contracting in both 2012 and 2013. Forecasts are slowly brightening and low growth (0.5%) is now predicted for 2014.

Unemployment, now at around 8.2% is not predicted to start falling until next year but

Totalnumber numberof ofhouseholds households Total 150

10 Millions

Thousands 120

8

90

6

60

4

30

2

0 1960

1980

2000

YTY difference

2020

2040*

0 2060*

Number of households

SOURCE: CBS (2013A, 2013E)

‘I call on investors both at home and abroad to come forward to fill the gap on the non-regulated rental market.

I foresee a steep rise in demand for these particular rental properties over the coming years.’ Stef Blok, Dutch housing minister is still moderate when compared with other European and OECD countries. Inflation is also low. Consumer confidence, which has been very low in the past few years, is also now beginning to recover, reinforcing signs that the economy is starting to improve.

Limited supply Times may have been tough for existing investors but there are good opportunities for new investments. Supply is limited, due to the downturn in the construction market and government policy aims to restore the balance between the rental and owneroccupier sectors, which is likely to increase the supply of homes with rents of over €700 a year.

This, the report points out, ‘will provide a solution for the middle and higher income households who are not eligible for social housing and are not able to access the owner-occupied market due to stricter rules for mortgages.’

The Netherlands was until recently one of the few countries in Europe where mortgages remained fully tax-deductible. This has been reduced and tax relief is now only applicable to annuity-based mortgages.

The government says at least one million

Structure of the Dutch housing market Total = 100% 7,266,295 dwellings

Rental = 43% Approx. 3.15 million dwellings

Housing associations = 71% Approx. 4.10 million dwellings

Owner-occupied = 57% Approx. 4.10 million dwellings

Investors = 29% Approx. 900,000 dwellings

94% regulated 6% unregulated Institutional = 16% Approx. 140,000 dwellings

Private investor = 84% Approx. 760,000 dwellings

45% regulated 55% unregulated

73% regulated 27% unregulated source: cbs (2013h), ipd (2013)

houses currently in the rent-controlled sector have the potential to become part of the country’s non-regulated housing stock. This means the investment opportunities for institutional investors in the non-regulated sector are expected to grow.

‘The fundamentals for Dutch residential property investments have definitely improved in recent years,’ the report concludes. ‘And it is likely that investment opportunities on the Dutch residential market will grow in the years to come.’

Population growth Indeed, the Dutch population is also expanding and demand is expected to grow by 540,000 households over the next 10 years, further pressuring supply. Elderly single-person households are expected to

Newconstruction construction New 100 80 60 40 20 0 1996

2000

2004

Rent New building permits

2008

2012

Owner occupied Finished dwellings SOURCE: CBS (2013D)

account for a large proportion of this.

However, as CBRE GI’s Robbert van Dijk points out, the demographic outlook is a lot less positive outside the urban areas and stockpicking is essential. And foreign investors will need to understand the complexities of the Dutch market as well. ‘Government regulations on the sale of housing corporation stock have loosened but have not been totally liberalised,’ Van Dijk points out. ‘One would have to look into that properly to avoid profit sharing or other restrictions.’

Despite the restrictions, social housing, shunned for years as a good investment, is also beginning to attract outside interest. Indeed, the IPD Netherlands Annual Social Housing Property Index published in April showed a positive total return of 0.9% on Dutch social housing in 2013. Residential rental income showed the largest growth in history, with an increase of 44 basis points to 3.6%.

Rents are rising ‘Social housing associations are making choices driven by government policy,’ says Lorenzo Dorigo, vice president and head of IPD’s Benelux operations. ‘Rents are rising and costs are coming down. This is resulting in a [rent-controlled] residential income return which is moving towards the level of commercially driven investors in the Netherlands.’

For example, Bouwinvest, one of the largest investors in residential properties in the

‘If the Netherlands can attract the capital flows to boost the supply of stock, I see no reason why we can’t match the appeal of neighbours such as Germany and the UK, where housing is hot.’ Boris van der Gijp, director strategy & research at Syntrus Achmea Netherlands, recently acquired 300 apartments in Amsterdam on behalf of its €2.6 bn institutional residential fund.

‘We are seeing clear signals that the Dutch residential market is bottoming out after five years of successive price falls,’ Allard van Spaandonk, director Netherlands at Bouwinvest, said at the time. ‘Now is a good time for investors to step into Dutch real estate, particularly residential properties.’

CBRE’s Robbert van Dijk says the non-­ regulated sector is likely to pick up sharply in the next few years. ‘Currently a large housing corporation has offered portfolios of over 6,000 dwellings to the market, which is generating a substantial amount of in­terest,’ he pointed out.

Learn more Register for the PropertyEU Investment Briefings 13.30 - 14.30 European residential 15.00 - 16.00 Dutch residential Download a full version of the ­special research report ‘Dutch ­Residential Investments in European ­Perspective’ from the website of ­PropertyEU www.propertyEU.info

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Programme Provada International Day 2014

Registration

Join the dedicated programme of PropertyEU Investment Briefings specially created for attendees at Provada. Benefit from a timeefficient briefing on key markets, find new opportunities, network with local and international investors and create real connections.

Register now to receive speaker updates, presentation material and guarantee your place. Registration is open to all attendees at Provada (3rd-5th June). International attendees who register to attend via the PropertyEU website will also gain complimentary tickets for Provada.

Simply register at www.propertyeu.info

European Logistics Investment Briefing

10.15 - 11.15 Aprisco Lounge. Hall 10

Germany Investment Briefing

11.15 - 12.15 Aprisco Lounge. Hall 10

European Residential Investment Briefing

13.30 - 14.30 Aprisco Lounge. Hall 10

Should investors look East, West or head South for opportunities?

Where to find value in the German market Which European markets will outperform in 2014?

Netherlands Investment Briefing

Will residential be the key sector driving recovery?

Top100 Investors

15.00 - 16.00 Real Estate Forum. Hall 9

Confirmed speakers

O N

T O P

O F

T H E

D E A L S .

I N

T O U C H

W I T H

T H E

D E A L M A K E R S

SPECIAL REPORT

TOP 100 INVESTORS AMERICANS HAVE LANDED: HEAVYWEIGHTS EYE EUROPE

Dirk Brounen, Professor Tilburg University

Stef Blok, Dutch housing minister

Michael Walton, Hadley Dean, CEO Rynda Managing Partner Property Investors Colliers Int.

Tia van Beek, Country Manager Goodman

AXA REAL ESTATE GOES GLOBAL

Dick van Hal, CEO Bouwinvest

PATRIZIA MOVES UP THE RANKING LISTING & PROFILES TOP INVESTORS

OCTOBER 2013 PEU13-INVESTORS-001-COVER-3.indd 1

Damian Harrington, Regional Director of Research Colliers Int.

Sascha Wilhelm, Managing Director Corestate Capital Advisors GmbH

Henk Jagersma, CEO Syntrus Achmea Real Estate & Finance

Marcus Cieleback, Head of Research Patrizia Immobilien AG

Klaus Franken, CEO Catella Property GmbH

Robbert van Dijk, Fund Manager CBRE Global Investors

PropertyEU Investment Briefings ‘The focus of our events throughout Europe is sharing knowledge, creating investment connections and highlighting potential opportunities. The new International Day at Provada allows international investors and Dutch investors to meet and benefit from a series of briefings focused on hot investment topics, including logistics and residential as well as Germany and, of course, the Netherlands.

With speakers already confirmed from leading companies including Patrizia, Catella, CBRE Global Investors, Amazon, Goodman, CBRE, Bouwinvest, Corestate,

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The 3rd edition of the PropertyEU Special Report on the TOP 100 Investors will be published to coincide with EXPO Real 2014.

It contains valuable deal data, commentary, research, listings and rankings as well as the strategies of the leading players across the industry.

This PropertyEU Special Report provides a unique overview of real estate investors in Europe and highlights which are the largest investors, which are the fastest growing, which funds are open to investment plus the top deals and selected deals in depth.

Make sure your company is included in the 3rd edition of this valuable publication.

Colliers International, and ­Syntrus Achmea alongside Housing Minister Stef Blok, it should be a very interesting and valuable meeting.’ Richard Betts, ­associate publisher PropertyEU

For more information contact

Thorsten Herbert + 49 170 47 98 793 herbert@propertyeu.info