Investors increasingly avoiding new rental housing construction

In the first quarter, investors invested 51 percent less in new construction for rental homes compared to a year ago, according to market research Capital Value. Residential investors pushed money into 1,609 new rental properties, compared to 3,770 in the first quarter of 2022, De Telegraaf reports.

In the spring memorandum, the Cabinet announced it would push 250 million euros into getting construction going. Municipalities can use this “impulse” to subsidize ready-to-go projects shelved by developers because they couldn’t get enough investment funding.

Capital Value director Marijn Snijders thinks this subsidy is a great idea, but it is too low and won’t have much effect until the end of 2024. “The arrival of the start-building impulse is a welcome measure, but the question remains whether the reserved 250 million euros is sufficient given the low number of building permits. Given the postponement of the construction of over 40,000 homes in recent months, double the amount will probably be needed.”

According to him, it's safe to assume that about 15,000 euros of impulse will be needed per home. So the subsidy is good for around 16,000 homes.

Start-building subsidies work, but they take some time, Snijders said to the Telegraaf, pointing to a successful subsidy launched by the former housing minister, Eberhard van der Laan, in 2009. Only in 2016 did delivered construction match the government target of 60,000 a year.

According to Capital Value, investors are still interested in the Dutch housing market, only not at the moment. “Investors are currently awaiting the details of mid-market regulation, as well as a correction in price levels following increased interest rates and construction costs. When this becomes clearer, investors will want to invest in rental properties again because the fundamentals of the Dutch housing market are strong. This is evident from, among other things, the housing shortage and the expected population growth.”