Approaches for Institutional Investors in the Netherlands to increase the middle rent segment stock
A.L. Ferreira Veiga Barros (TU Delft - Architecture and the Built Environment)
Ilir Nase – Mentor (TU Delft - Real Estate Management)
PJ Boelhouwer – Graduation committee member (TU Delft - Housing Systems)
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Abstract
Purpose: The Dutch housing market is under pressure. Shifts on the drivers, structures and economic factors of the residential market are causing the middle-segment to be excluded from it. As a consequence, the middle-segment rental stock needs to increase. Institutional investors are willing to develop middle-segment rental dwellings, but they have already missed out on an opportunity of using available resources for this purpose. However, they still have a chance to do so with new investment funds. Therefore, the development process and the market of the middle segment was researched so that pitfalls that halt the delivery of the middle-rental stock could emerge. These pitfalls were discussed through semi-structured interviews with institutional investors and knowledge experts so they could be validated and expanded. As a result, recommendations that solve the pitfalls were created. These recommendations thereby aim to increase the middle-segment rental stock. Research question: How can institutional investors increase the delivery of the middle rent segment? Methodology: A qualitative approach is used to answer the papers main question. First, a literature review about the housing market and the development process in which institutional investors takes part is conducted. Later, semi-structured interviews with institutional investors are carried out. The collected information is then used to create recommendations to increase the middle-rental stock. Conclusion: Recommendations aimed at institutional investors and municipalities were tailored. Capacity-building, diversifying, shaping and stimulus instruments were used for this purpose. In this regard, investors should pursue measures such as the diversification of their portfolio by investing in various cities, having a holding period of 10 to 15 years, setting up a program of requirements and making a public statement of intentions. While municipalities should develop a framework to guide investors, establish a tax break for investments in the G4 cities, make use of ground lease, focus on quality when issuing a tender, establish a tax break for developers and increase skills and capability of their workers. Limitations: This research focuses on institutional investors and therefore, the perspective of developers and municipalities about the pitfalls was not collected. Thus, the outcomes of the research are upheld by institutional investors but not by the two other actors of the development process. Further research that collects the point of view of developers and municipalities should be conducted. Keywords: middle-segment, institutional investors, rental segment, Dutch housing market, affordable housing