DH-Property buys 32 properties in the Netherlands after an 18-month pause: 'An unpleasant market for investors'
Together with LVDH Vastgoed, DH-Property has acquired a portfolio of 32 properties, mainly apartments, in The Hague region. The transaction followed the bankruptcy of a Hague developer last summer. VJ spoke with owner Danny van der Horst: 'Although we made no investments in the Netherlands for a year, we are now looking for larger portfolios, because that gives us a better purchasing advantage.'
According to Land Registry data, DH-Property and LVDH Vastgoed paid 3.05 million euros for the portfolio. 'We made an offer based on the investment value, so it was a pleasant surprise that my bid was accepted by the administrator. We had no financing or structural survey conditions, which made our offer attractive.'
The properties consist mainly of various apartments and three spacious retail units, ranging in size from 70 to 200 m². They are located in The Hague, Rijswijk and Wateringen. Although the retail units are currently vacant, most of the apartments are let, though some tenancy agreements have been terminated. Some properties will be sold after development or renovation, while others will be let in partnership with LVDH Vastgoed. One of the three retail units has a building plan for the development of apartments. Whether the other two retail units will also be transformed into homes has yet to be decided.
In a LinkedIn post, owner Van der Horst wrote that he had taken a temporary break from the Dutch property market. 'Over the past year and a half I have been less active in the Netherlands and have focused mainly on activities abroad, particularly in Spain. The current conditions in the Netherlands make our work almost impossible. We look for development projects where we can add value, but the current situation makes that unattractive. Purchasing is expensive, construction costs are high and the return is minimal.'
The recent acquisition therefore represents a rare opportunity in the Dutch market. 'I am very selective with acquisitions in the Netherlands. The deal almost has to be too good to be true. We have to allow a margin for the risk we take, particularly in view of the new regulations on affordable rent. That is why we are now looking for larger portfolios. Thanks to the purchasing advantage of larger portfolios, the numbers can sometimes still add up. Many investors now also want to sell because of the new box 3 rules or sustainability requirements, and they have no appetite for that. We are willing to buy these properties and carry out the work.'
He also finds the current market unpleasant for investors. 'When I open the newspaper, all I read about is slumlords, as if every investor is out to exploit people. We simply look for projects we can improve, sell or manage. That is just our job. But politics is now focused mainly on driving down house prices and insulting the investor, which makes the risk simply too high for us. There is hardly any supply and building is extremely expensive, so this feels like a kick when we are already down.' Van der Horst compares the treatment of property owners in the Netherlands with that in Spain and England: 'There, an investor is addressed very respectfully as "the landlord". In the Netherlands these days, you are the villain.'
Because nobody is going to invest at today's expected returns. 'If I look at current purchase prices and the rent you will be allowed to charge under regulation, you get a return of 2.5 to 3 percent. Nobody does it for that; you might as well buy bonds, because you get the same return.'
With this new acquisition, DH-Property is once again cautiously looking for new portfolios in the Netherlands. 'We are open to attractive existing portfolios like this one, but we obviously do not pay top dollar; we pay the investment value.' As for the expected return on the recent acquisition, Van der Horst remains cautiously optimistic: 'We are still taking stock of our new acquisition. It is difficult to predict the return because of the diversity of the portfolio. But given the attractive purchase price, we dared to take the risk.'