FOCUS
Keypoints
- Encouraging housing production remains necessary
- € 40 billion to be invested by market parties in a challenging investment climate
- An additional 440,000 rental homes to be made sustainable at a cost of € 22 billion
Challenge in the housing investment market greater than ever
The housing shortage in the Netherlands has risen again. Despite all efforts and attention, the shortage has increased by 10,300 homes within a year. According to the Primos forecast published in July, there is now a shortage of over 400,000 homes, equivalent to 4.9 percent of the total stock. In the institutional investment market, this housing shortage is reflected in historically low vacancy rates. Additionally, the housing market faces a significant sustainability challenge: approximately 30 percent of Dutch homes have an energy label of D or lower. In this analysis, we delve deeper into the figures, the impact on investments in Dutch (rental) housing, and why it is essential to maintain investment willingness.
Encouraging new construction remains necessary
To combat the housing shortage, the previous cabinet launched the Housing Construction Program, which set the goal of building 900,000 homes between 2022 and 2030. This translates to an annual production of 100,000 homes. The national government is employing various tools, such as addressing bottlenecks, investing in infrastructure, and concluding regional housing deals with municipalities and provinces. However, with approximately 90,000 homes completed annually in 2022 and 2023, housing production is lagging behind the target, making the challenge even greater. Additionally, the number of building permits issued for new homes reached its lowest level in ten years in 2023. There is therefore an urgent need for stimulating policies to keep housing production on track.
HOUSING PRODUCTION

Source: CBS (2024)
€ 40 billion to be invested by market parties in a challenging investment climate
Of the intended new construction target of 900,000 homes, one-third must be realized by housing associations in the social and mid-rental sectors. The remaining 600,000 homes need to be built by market parties, half of which should be mid-rental and affordable for purchase. Based on the current distribution between ownership and rental in the housing stock, this means that market parties must deliver approximately 95,000 rental homes by 2030. This requires a total investment estimated at € 40 to € 50 billion. For comparison, institutional residential investors currently own about € 43 billion in rental properties in the Netherlands (source: MSCI). This underscores the enormous investment challenge they, along with other investors, face to achieve the desired housing production. This investment challenge must be met in a challenging investment climate. Higher interest rates have increased return requirements and financing costs, making it more difficult to make new developments financially viable. At the same time, fiscal measures have been introduced that, combined with new rent regulation, have made investing in rental properties less attractive, particularly for private and foreign investors.
An additional 440,000 rental homes to be made sustainable
In addition to new construction, there is also a significant sustainability challenge in the existing housing stock. Homes with energy label D account for 30 percent of the total housing stock (both owned and rented). These homes have low energy efficiency and require substantial investments in insulation and systems. Among large landlords, including institutional investors, approximately 13 percent of the homes have a label D or worse. For smaller landlords, with fewer than 500 homes, this percentage rises to 44 percent. In total, this amounts to around 440,000 rental homes owned by market parties with an energy label D or lower. Although sustainability measures need to be tailored to each property, it costs an average of approximately € 50,000 per home to upgrade a label D property to label A. This results in a total cost of € 22 billion for all label D homes owned by market parties. If the goal is to make these homes Paris Proof, the costs will further increase. While these investments make the homes more future-proof, they lead to only limited short-term value appreciation. Recent research by Achmea Real Estate (link) shows that investments in sustainability only contribute to value appreciation after a few years. However, sustainability improvements do offer other benefits, such as lower energy costs and increased living comfort for residents. Moreover, it is essential to comply with (European) regulations to ensure that the built environment meets the goals of the Paris Climate Agreement.
DISTRIBUTION OF ENERGY LABELS BY OWNER

Source: RVO (2023)
Conclusion: Up to € 70 billion needed from market parties to build and make rental homes more sustainable
Although exact amounts are difficult to estimate, we can conclude that tens of billions of euros in investments are needed in new and existing Dutch rental homes to achieve the housing and sustainability targets. This is in addition to the major challenges that housing associations and private households face in their residential properties. In recent years, the investment conditions for real estate have deteriorated due to rising interest rates. Although the economy seems to be stabilizing, fiscal interventions and rent regulation have led to caution or even withdrawal by (housing) investors. This is concerning for the growth and sustainability of the housing stock. Institutional investors have proven to invest sustainably and contribute to a strong mid-rental market. Therefore, the new government must do everything possible to maintain the investment willingness of institutional investors by creating an attractive investment climate that enables a profitable long-term business case.
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