Dutch investors to up exposure to non-listed funds by 30%

INREV predicts Dutch institutional investors, who have a total of €41.6bn invested in unlisted property funds, are set to grow this to €54bn in three years

The Netherlands looks set to become an even more important source of European capital for real estate managers.

A country survey conducted by Dutch consultant Almazara on behalf of the European Association for investors in non-listed real estate fund (INREV) gathered 50 responses from pension funds, insurance companies and a charity representing 60 percent of the entire institutional investor base in the Netherlands.

Using information from those 50, the survey concludes that currently institutional investors have €41.6 billion in unlisted funds, but that this is to increase 30 percent to €54 billion in three years.

Some investors with limited allocation to non listed real estate will increase it, and investors with larger direct portfolios are faced with pressure to gradually convert their holdings into non-listed real estate, it said. It added that some of the investors will open their existing portfolios to other investors.

The other reason for the expected rise is that total real estate assets among Dutch groups are forecast to grow 18 percent in three years, partly because institutions are currently below target allocation, resulting in demand for an additional €4 billion of property, and partly because institutions plan to up allocations to real estate from 10.45 percent to 10.9 percent.  

The Netherlands is already one of the key sources of capital for managers of real estate funds, and has almost as much capital invested in unlisted real estate funds as in direct property.

This is in contrast to Germany and the UK, where direct holdings dominate institutional portfolios.

According to the survey, the main reasons for Dutch investors going indirect were that funds offered more stable returns and lower volatility. In addition, many investors have investment teams for each different asset class. However, with real estate, larger teams are required to manage the assets leading to decisions to outsource the function.

Lonneke Löwik, director of research and market information at INREV, said Dutch investors were “highly sophisticated” in their strategies for property and had used the asset class for longer than their peers in other countries.