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a lot of interest in housing investments in corona year

The interest of real estate investors in the European rental housing market grew to great heights in corona year 2020. A total of 60.7 billion euros was invested, 18% more than the five-year average. The Netherlands ranks three of the largest investment markets in Europe, after Germany and the United Kingdom. This is evident from research by real estate consultant Colliers.

Last year, more than 8 billion euros was invested in the Netherlands, more than twice as much as the ten-year average. This is because Dutch housing complexes can still be bought relatively cheaply in relation to what investors pay in, for example, Germany or Spain.

Homes accounted for 22% of the total investment volume in European real estate last year, the largest share in ten years. In the Netherlands it was even above 40%.

"The high rents and low risks make rental housing an attractive investment and will remain so for the time being," says researcher Frank Verwoerd of Colliers. "Low planning capacity due to a lack of space and transformable real estate means that the new supply cannot keep up with the growing demand in the coming years."

Rising rents due to housing shortage
Due to the severe housing shortage, affordability is a concern for many Europeans. This applies to both rental and owner-occupied homes. Paris, London, Amsterdam, Munich and Manchester are in the top five most expensive cities to buy a house. In Amsterdam you can afford only 17 square meters with an average income, in Paris this is only 11 square meters.

Because many Europeans cannot afford to buy a house and are not eligible for social housing, they are dependent on the free rental sector. That leads to shortages. On average, rents in Europe have increased by 15% between 2016 and 2020, but there are large differences between countries and cities. Rotterdam, Utrecht, Valencia and Stuttgart are among the biggest risers with about 30%. Strange duck is Italy. Rents there have fallen by 6% in the last four years.

Concerns lead to regulation
The deteriorating affordability of rental housing is leading to increasing political concerns, also outside the Netherlands. In Amsterdam, rents for new homes may not be increased annually by more than inflation plus 1%. Berlin is also leading the way with new regulations to control rents.

"Regulation of the as yet 'free' sector will reduce investor interest," says Verwoerd. “We have seen this before in Berlin. Threats of stricter local regulations on the housing market are not contributing to the interest of domestic and foreign investors. Investments are necessary in almost every European city to tackle the housing market problem at the root, namely the large shortage.