With the end of 2024 and the start of 2025, the recovery in the real estate market is cautiously continuing. The first positive signals from the last quarter are being followed up, and European investors are coming closer to their targets after a period of underallocation. According to the Investment Intentions Survey 2025 by INREV, institutional investors are once again allocating new capital to real estate, with a strong focus on core strategies and sectors with stable fundamentals. Student housing is quickly gaining ground as one of the three most sought-after sectors, while interest in offices continues to decline. Residential real estate remains the absolute favorite, particularly affordable rental housing and senior housing, a domain where impact, sustainability, and returns go hand in hand.

In the Netherlands, the residential and healthcare real estate market continues to offer attractive investment opportunities. The MSCI benchmark shows solid total returns in most real estate segments in the fourth quarter. Rising market rents and the ongoing scarcity of affordable housing support real estate valuations, while initial yields are slightly declining. In the retail market, we see a clear split: high street locations and convenience remain in demand, while secondary locations continue to struggle with vacancies and structural changes. Although investment volumes are still lagging, a gradual increase is expected in 2025.

In this Investment Update, we focus on the perspective of tenants in the sustainability of residential complexes. The energy transition becomes tangible for tenants when lower energy costs and increased living comfort are partly reflected in the rent. This not only benefits residents but also strengthens the business case for large-scale renovations and sustainability investments. With the launch of the Achmea Dutch Residential Impact Fund, we aim to accelerate the sustainability of the Dutch (rental) housing stock.

At the same time, political and economic factors continue to influence the market. The Minister of Housing and Spatial Planning is working on solutions for the housing and healthcare market, but rent regulation and uncertainty about tax reforms keep investors cautious. However, a further interest rate reduction by central banks in 2025 could create a more attractive financing climate and further strengthen the momentum. With these developments in sight, 2025 promises to be a year of renewed confidence and strategic opportunities.

Peter Koppers, Director Investment Management