'The Opportunity Is Massive': Looking Beyond Tight Regulations To Invest In The Dutch Living Sector

The Netherlands’ housing crisis is a top subject for the politicians vying for election on 29 October. In an open letter to politicians, leading housing experts asked the government to stop making promises and focus on creating long-term, consistent regulations that tackle the crisis, rather than push up house prices and impede development.

Despite the chilling effect of previous regulation, the Netherlands’ living sector remains a solid market for investment, Bouwinvest Fund Manager for Dutch Residential Investments Paul van Stiphout said. If long-term investors understand each market and target demographic, factors such as regulations needn’t put them off. 

“The opportunity is massive,” van Stiphout said. “The fundamentals are rock solid. They have been for some time and will remain so. The market has corrected in the wake of Covid and interest rate rises, and current strength is driven by market rental growth and vacant possession values, not yield compression.”

There is a deficit of 400,000 homes, according to the government, while house prices were 11% higher in December 2024 than a year earlier.

The current and earlier governments have each introduced regulations aimed at addressing this imbalance. In July 2024, the Affordable Rent Act expanded the points-based system that brought more midrange properties into regulations. As a result, there was a 36% fall in available properties in this segment as landlords sold homes. 

“Demand gravitates towards cities, and there is a lack of housing for young professionals and smaller households, but really there is a shortage all round,” van Stiphout said. “While we need to add housing for young people, we’ll also be adding just shy of a million elderly households in the next 10 years.”

Bouwinvest’s portfolio has about 19,000 units with a gross value of around €8B, 30% of the units single-family housing and the rest multifamily. The investor is focusing on providing housing to the middle of the market that sits just above the regulated segment.

Greystar is similarly focusing part of its pan-European strategy on addressing the lack of homes for one-person and two-person households and couples with their first child, Greystar Senior Managing Director Central Europe Mark Kuijpers said. Greystar's portfolio in the Netherlands totals 5,000 homes across living sectors. 

In 2024, it launched the €1.2B Dutch Essential Housing Venture with pension fund ABP aimed at investing in and developing attainable rental housing for essential workers, starters and small households in the Netherlands. In September, the JV added to the initial €420M investment made by ABP with a further €524M, all of which is part of ABP’s commitment to invest €5B in Dutch housing over the next five years.

“We’re creating attainable residential homes for these small urban households by making homes more compact, so lower-cost, but paying a lot of attention to floor plan layout to maximise usable space,” Kuijpers said. “We also create multifunctional space in the building for working, exercising or socialising, which provides an extension to the private home to accommodate a modern urban lifestyle.”

Although demand for residential with such amenities is growing, increasingly restrictive rental regulations stymie the business case for developing in this sector, said Sebastian Zwart, senior director of investment and development at Rockfield Real Estate, a developer and property manager delivering purpose-built student accommodation and coliving. 

As well as the affordable rent cap, service charge restrictions mean only certain costs can be charged to the tenant on a no-profit basis, rather than all amenities that a developer might want to provide. 

Rockfield’s overall goal is to add affordable housing for the lower segment of the market to replace rentals that have been sold as family housing, but as a result of regulations, its focus is shifting. The business is increasingly developing shorter-contract housing as well as its core focus of the affordable sector, Zwart said. 

“This is flexible accommodation for people who typically want to stay for six to 12 months and want to live in the city centre,” he said. “These small apartments are highly amenitised and can have communal spaces such as study rooms or games rooms because the same regulations don’t apply for housing that only requires short-term permits.”

As well as the impact of regulations, the Dutch living sector is grappling with the rise in construction costs that has occurred across Europe, particularly since the pandemic. Costs rose in 2024 by 3.2% and there is an increasing shortage of labour. 

The Netherlands also lacks land for new construction, Zwart said. Where land does exist for new schemes, it makes sense to create homes that are viable.

“A lot of fringe locations are hindered by noise, trains or pollution from factories and manufacturing,” he said. “There are fewer and fewer opportunities, which is why it makes sense to create flexible, short-term accommodation, which has fewer regulations relating to where it can be constructed.”

Zwart said he thinks it is unlikely that any new government will bring in policies that could ease the housing shortage by kick-starting delivery of new homes in the short term. 

“I’ve been working in the housing sector for 15 years, and in that time the imbalance hasn’t changed, despite regulations loosening, then tightening again,” he said. “What the industry really desires is rest. Keep it as it is so it can breathe.”

Despite changing regulations and the high cost of construction, van Stiphout said he believes the fundamentals for investing in Dutch residential real estate are extremely strong. 

Bouwinvest sits on both the buy and sell sides as it actively rotates capital to bring in new properties and put homes back on the market. Last year, competition was mainly Dutch. But this year, international investors seeking long-term, stable capital are returning, he said. 

“The market isn’t as overheated as it used to be in 2016-2017,” he said. “We’ve seen international capital retreat on the back of some tax changes, and the government has given the market some swings and roundabouts in terms of regulation, but we do see an appetite returning from international investors.”

PBSA is proving a particularly strong market in the Netherlands. Major cities across Europe are experiencing a growing supply-demand gap for student beds, including Amsterdam, where demand is four times supply. 

In July, Rockfield acquired a portfolio comprising 1,209 PBSA beds in partnership with Ardian, one of the largest PBSA transactions in the Netherlands to date. 

Student accommodation is another area of interest for Greystar. The supply-demand gap has increased since Brexit, as more international students are attracted to the Netherlands and many programmes are taught in English, Kuijpers said.

“Regulations have also driven private landlords for student accommodation away,” he said. “Students used to rent a house in a group of three or four, but these homes are being sold or rented by single-family households. We are very keen to work with municipalities and universities to find more large-scale student housing solutions.”

Overall, Kuijpers was positive about what a new government could deliver for the Dutch real estate sector. 

“It’s important to understand that where policymakers have tightened screws in the last few years, we will enter a space where they will loosen again,” Kuijpers said. “They see the effect of their policies and realise they need to give more oxygen to the market to catch up with demand.”

Van Stiphout is similarly optimistic. Bouwinvest engages with government at all levels and has been vocal about the challenges the sector faces, he said. 

“The civil servants dealing with issues understand we need to cooperate, because otherwise nothing will happen,” he said. “Gradually, there’s an understanding that many regulations were counterproductive, as they exacerbated the supply-demand imbalance, which was the opposite of what was intended.”

One regulation that has helped the institutional market is the part of the Affordable Rent Act that rewards the owners of sustainable properties by allowing them to command a higher rent, van Stiphout said. While Bouwinvest’s portfolio is largely highly sustainable, landlords that owned older assets with poor sustainability credentials but were charging premium rents were forced to act.

This meant they either had to bring properties up to standard or face the real possibility of a significant reduction in their income-generating potential, he said. Subsequently, many landlords put such properties on the market for sale. 

Overall, if an investor is able to work with a local partner to understand what product is best suited to which market, regulations should not put them off, van Stiphout said. 

“The Netherlands is known for being pretty regulated, but anyone who’s investing in residential will have already crossed that bridge and accepted regulations as a fact of life,” he said. “If you’re able to navigate and see them coming, you can make sure you focus on the right things at the right time.”

Bisnow's Netherlands State of the Market event will be held on 13 November at WTC Amsterdam. Find out more and register to attend.