The IPD Netherlands Annual Social Housing Property Index showed a total return of 0.9 per cent for all Dutch social housing property in 2013.
This positive figure is driven by an income return of 3.9 per cent where capital growth registered -2.8 per cent.
Residential income return showed the largest growth in history by adding 44 basis points over 2013, reaching 3.6 per cent. An ongoing increase in rent is an important explanatory factor. Residential rent grew in 2013 by 4.9 per cent which is higher than inflation. Operating costs showed a decline over 2013 dropping from EUR37.10 per square metre in 2012 to EUR36.72 in 2013. Maintenance costs went down from EUR20.63 per square metre to EUR20.44. A decline in the residential capital value also contributed to the higher income return.
Residential capital values fell by 2.4 per cent and social property (non-residential) recorded a decrease in capital values of 11.1 per cent. This is driven by regulatory change in the care sector encouraging care at home instead of care in healthcare-specific real estate. This places care properties in a new market perspective. An income return of 8.3 per cent could not compensate for the decrease in capital value resulting in the first negative return in history for this sector, of 3.6 per cent.
Commercial property values fell for the sixth subsequent year in a row, by 3.9 per cent in 2013.
Regional differences are large, illustrated by a regional spread in capital growth of 432 basis points. North Netherlands showed a total return of -1.9 per cent and the Southern Randstad performed best with 2.5 per cent.
The social dividend over 2013 is 17 basis points lower compared with 2012 and registered 1.6 per cent. This measure reflects the difference between open market rental value and the actual rent. Residential open market rental value grew 2.9 per cent in 2013 and the actual rent grew 4.9 per cent, resulting in a smaller difference between both rents.
The level of total investment turnover also dropped from 4.4 per cent of capital value in 2012 to 3.9 per cent in 2013. This is equal to the registered turnover in 2005 and is 110 basis points lower in comparison with the highest level registered in the index in 2010.
Lorenzo Dorigo, vice president and head of BeNeLux, says: “Social housing associations are making choices driven by governmental policy. Rents are rising and costs are lowering. This results in a residential income return that moves towards the level which IPD measures for commercially driven investors in The Netherlands.”