We are now several months into 2024 and we are seeing slight signs of recovery in the real estate markets. For example, property values appear to be stabilising in the first quarter of 2024. However, the signs of recovery are fragile, as investment volumes are still low and government bond yields are rising slightly again due to the possible postponement of interest rate cuts by the ECB. There are also a number of political, social and economic uncertainties, the future impact of which remains difficult to assess.

In real estate, it is important to keep a close eye on occupier markets. These are in unprecedented good shape. In retail markets, for example, we are seeing growing consumer confidence. Although vacancy rates have risen slightly, they are still relatively low compared with previous years. This is certainly true of the prime A1 locations in the Netherlands. Rent levels have also been stable for several quarters. In addition, demand for residential and healthcare properties is at an all-time high, strongly driven by the current housing shortage. With future strong growth in the number of households and an ageing population, demand for residential and care real estate will continue to rise. This strong demand will result in highly predictable, stable direct returns for investors.

Of course, the current housing shortage is also a social problem. That is why the Affordable Rent Act has been under discussion since 2022. This law, which has now been passed by the House of Representatives, will regulate housing with rents of up to around €1,150. Subject to early approval by the Senate, the law will come into force on 1 July 2024.

Meanwhile, the Senate has extended the Nijboer Act. The law has been extended from 1 May 2024 to 2029 and will limit annual rent increases to the lowest of CPI+1% development or CAO (collective labor agreement) wage development+1%. In the Focus of this Investment Update we therefore explain the implications of this legislation. Although the legislation is certainly not perfect, we support its introduction. It will create stability in the sector and allow new capital to be attracted to get the housing sector moving again. This is desperately needed to reduce the housing shortage.

Casper Hesp, Director Investment Management