INVESTMENT MARKET
The Netherlands offers abundant opportunities
The world is changing faster than ever. Demographic shifts, technological advancements, geopolitical changes, and the urgency of climate change not only create challenges but also opportunities for investors. The Netherlands, too, faces a major task. Two megatrends stand out: Demographics & Well-being and Climate & Energy.
The figures speak for themselves. In the next 15 years, approximately 900,000 regular and life-cycle-proof homes must be realized and an additional100,000 care places suitable for intensive care. This requires substantial capital flows. For the mid-segment and free sector rental homes alone, an investment of €55 billion is needed. After deducting the share of housing associations in this task, a capital requirement of around €37 billion remains.
Within the megatrend of Climate & Energy, making real estate more sustainable is a huge challenge. To bring all rental homes owned by market parties with an energy label D or lower to Paris Proof, an additional investment of €65 billion is necessary. And this concerns only homes; other real estate segments are not yet included.
“Creating impact, optimising returns”
Despite the influence of government policy, such as transfer tax and rent and sales restrictions, the Netherlands is an attractive investment market in the international context. In addition to attractive investment characteristics, investing in the Dutch real estate market also enables impact to be realised.
Rotterdam, De Sax
Stable, attractive, and future-proof
In an increasingly turbulent world, investors seek security and impact. Dutch institutional investors are therefore increasingly focusing on investments close to home. Not only to show social involvement towards pension participants but also as a response to geopolitical shifts. The United States[1], for example, is increasingly seen as less reliable, which means the demand for European allocations is clearly on the agenda of boards.
[1] Source: FD, 12 oktober: Pension funds shift focus to Europe as the U.S. becomes less reliable (in Dutch).
Within this reorientation, Dutch real estate is an attractive choice due to the combination of social impact and financial return. Given the scale of the social task and the solid foundations of the Dutch economy, a higher allocation to this market seems a logical step.
In the following paragraphs, we will elaborate on the added value of Dutch real estate compared to competing international real estate investment markets.
Amsterdam, De Nieuwe St. Jacob
A strong economy provides a solid foundation
The Netherlands has been among the best-performing economies in Europe for ten years. With an average economic growth of 1.9% and structurally low unemployment, the country has proven to be resilient and competitive. The outlook remains favourable: for the next five years, an average GDP growth of 1.6% is expected.
The Netherlands is a European logistics hotspot (Rotterdam, Schiphol) with a highly advanced (digital) infrastructure and a high density of rail and (water)ways. This positions the country excellently for the distribution of European e-commerce and supply chain optimisation. This stable economic base makes the Netherlands one of the most attractive markets for real estate investments. Compared to other major investment countries, the Netherlands remains competitive, with strong demand-driven dynamics and a transparent market structure.
The Netherlands has a well-developed and liquid real estate market within Europe, with a large number of institutional investors and specialised funds. This facilitates entry and exit, even with larger tickets. The structural demand for housing remains high due to population growth, urbanisation, and smaller households. This creates a stable demand base, especially in urban areas.
FIGURE 1: Economic development of selected countries (2016–2025)
Source: Oxford Economics
FIGURE 2: Projected GDP growth in selected countries (2026–2030)
Source: Oxford Economics
Transparent and mature market with a strong competitive position
The Netherlands is a reliable and efficient economy in the global context. In terms of costs, inflation, and credit risk, the Dutch economy performs better than most other developed economies. Inflation is expected to fall to 2% in 2026[2], while the open and competitive economy maintains its strong position in the world market. This is reflected in figure 2 on the economic growth expectations of a number of selected countries with large real estate markets that compete with the Netherlands.
The Dutch (real estate) market is well regulated, transparent, and equipped with high-quality, reliable data. This lowers the entry threshold for international investors and enables effective risk management. Although there is regulation, the Dutch system ensures predictable rental contracts and low default risks among tenants, which is attractive for long-term investors.
[2] Source: Oxford Economics, Country Economic Forecast, oktober 2025.
FIGURE 3: Government debt: the Netherlands versus other developed economies
Source: Oxford Economics
Financial stability and creditworthiness
The Netherlands has a low national debt. This provides a solid financial base and contributes to an attractive investment climate. Credit rating agencies place the Netherlands, together with the Scandinavian countries, Germany, and Canada, in the top category of countries with the highest creditworthiness scores.
According to the Economic Risk Index of Oxford Economics, the Netherlands is also among the most stable economies in the world, ranking 8th out of 164 countries. Oxford Economics looks at aspects such as market demand, costs, and credit risks. The AAA rating from all major credit rating agencies underlines this image and offers investors a reliable and predictable investment climate, even in times of international uncertainty.
Excellent real estate returns
Dutch real estate has achieved the highest returns among the major investment countries over the past ten years, with an average annual return of 8%. This success is partly due to the large representation of investment rental homes in the Netherlands and the significant (and ongoing) scarcity of housing. The outlook for the coming years also remains favourable. Economic consultancy Oxford Economics has estimated the expected returns of the largest real estate economies. This shows that the Netherlands will continue to perform solidly and is expected to do much better than, for example, France and Germany. The expected returns are much higher for Australia, the United Kingdom, and the United States. This is due to differences in the composition of these MSCI benchmarks and higher interest rates.
FIGURE 4: Realized and projected MSCI returns for selected countries (All Property)
Source: Oxford Economics
Strong sustainability position: GRESB top score as a quality guarantee
Dutch real estate funds, together with Australian real estate funds, are among the world leaders in sustainability, as evidenced by their very high scores in the GRESB benchmark. This ranking not only underlines the quality of real estate investments but also reflects a low risk profile, particularly regarding transition risks. For institutional investors, this means that investing in Dutch real estate not only contributes to ESG objectives but also ensures robust, future-proof portfolios.
This strong sustainability position aligns seamlessly with one of the most important global megatrends: Climate & Energy. In a world where the energy transition and CO₂ reduction are central, Dutch real estate offers a strategic advantage. Sustainability is not a side issue but a core factor that strengthens the Netherlands’ competitive position and helps investors create both financial and social value.
“The strong sustainability position of the Netherlands aligns seamlessly with one of the most important global megatrends: Climate & Energy.”
Attractive management costs
Investing in Dutch real estate is attractive due to the relatively low and transparent management costs, especially compared to many foreign alternatives. For directly managed Dutch residential funds, total costs are around 0.4% of shareholder capital. This is significantly lower than the average costs at institutional real estate funds in Europe and the United States, where management fees are usually around 0.9% to 1.0% and total costs including performance fees can rise to 1.2% to 1.4%.
Dutch real estate managers are generally efficiently organised, especially when management is carried out internally. The Netherlands has a strong position in proptech and the digitalisation of real estate management. This contributes to more efficient operations and increases data transparency for investors. When management remains in-house, the lower costs directly benefit the investor, as there is no profit margin or external management fee applied. As a result, a larger share of the return flows back to the investor.
Zaandam, Burano
No tax leakage for Dutch pension funds
Dutch pension funds also do not have to pay corporation tax on their income, such as profits from investments, and are entitled to a refund of dividend tax. The reason for this is that these incomes are later taxed at the participant level when participants receive their pension. This prevents double taxation, which is favourable for the investment climate of Dutch pension funds.
Unfortunately, such rules do not apply to foreign pension funds. The Netherlands has chosen to abolish the fiscally advantageous REIT regime, making the Netherlands fiscally less attractive than many other countries. Added to this is the relatively high transfer tax. This is why the industry association IVBN is urging the new cabinet to improve the investment climate. We refer to the paragraph “International capital holds the key to Dutch real estate ambitions.”
“Dutch real estate investments are an effective inflation hedge.”
No currency risk for Dutch institutional investors
Investing in Dutch real estate offers an important advantage: there is no currency risk within the Eurozone, as the same currency is used everywhere. Outside the Eurozone, it is different. There, investors must take into account exchange rate fluctuations, which can affect returns.
Many investors choose to fully or partially hedge currency risks. With full hedging, the return must be adjusted for the costs of that hedge. This adjustment is usually equal to the interest rate difference between the euro area and the country of investment. The cost of a forward exchange contract reflects this difference in short-term interest rates.
This means that when the interest rate in, for example, the United States or Australia is higher than in the Netherlands, the seemingly higher return in local currency largely disappears after hedging the currency risk. The advantage is neutralised by the higher interest costs of the hedge.
Inflation hedge: The best link between return and liabilities
One of the main reasons to invest in real estate is protection against inflation through indexed rental contracts. In the Netherlands, inflation has been on average higher since the introduction of the euro than in many other European countries. Dutch rental contracts are almost always linked to inflation, allowing investors to benefit directly from price increases in their rental income.
This makes Dutch real estate investments a more effective inflation hedge than comparable investments outside the Netherlands.
Amsterdam, Zuidas
International capital holds the key to Dutch real estate ambitions
New investments from Dutch institutional investors can help solve the housing shortage and the sustainability challenge, but is probably insufficient to finance the total task. Even if all Dutch pension funds were to raise their allocations to Dutch housing by 1%- that amounts to €19 billion- a significant financing gap would remain. It is unrealistic to expect the government to close this gap, given other social challenges. Foreign capital is therefore essential to realise the ambitious real estate goals in the Netherlands. Moreover, international inflow ensures more liquidity and dynamism in the market.
To improve the investment climate and attract international capital, structural measures are needed. Foreign investors are currently investing only to a limited extent in Dutch real estate due to:
- High Transfer Tax: Currently 10.4% for all real estate investments; from 2026, 8.0% for residential investments, but still one of the highest rates in Europe. Harmonising the transfer tax in line with other countries in Europe increases relative attractiveness. This would not only stimulate the inflow of foreign capital but also contribute to a robust and liquid real estate market.
- Abolition of FBI Status: Foreign institutional investors now pay corporation tax, whereas previously they did not. Reintroducing a, possibly modified, REIT regime that meets the needs of long-term investors would be an important step to make the Netherlands attractive again for international capital.
- Regulatory Pressure and Legislation: Strict rent regulation and frequent policy changes reduce the predictability of returns and thus investment security.
For institutional investors, stability is crucial. A robust political system, supported by clear and consistent regulation, can make the difference. The presence of a strong Ministry of Housing and Spatial Planning (VRO) that guarantees long-term policy gives investors confidence that investment decisions will not be overtaken by political uncertainty.
To attract foreign investors, these bottlenecks must be addressed. Although regulatory pressure is also increasing in other countries, it is mainly fiscal measures that make the Netherlands less attractive. Rent regulation reinforces this effect, as higher fiscal burdens cannot be offset by rent increases. There is a need for stable rules and safeguards against political uncertainty, so that investment decisions are not overtaken by policy changes. At the same time, the interests of tenants and other stakeholders must be well protected.
Positive influence of the Future Pensions Act
The introduction of the Future Pensions Act (known in the Netherlands as ‘WTP’) marks a fundamental shift in the Dutch pension landscape. The focus shifts from guaranteed benefits to returns and from collective asset accumulation to individual pension schemes. This creates more room for investments with an attractive risk-return profile, such as real estate. Real estate not only offers stable cash flows and protection against inflation but also a good return perspective and social impact—a combination that fits well with the pension objectives within the WTP.
Lifecycle approach: Tailored real estate allocation
The WTP introduces a lifecycle approach in which the investment profile is tailored to the age of participants. Younger cohorts can benefit from long-term returns through growth and redevelopment strategies, while older cohorts benefit from stable rental income from core portfolios. The disappearance of the capital reserve requirements and more flexibility in interest rate risk management increase the possibilities to hold direct real estate for a long time. Real estate thus becomes a strategic anchor in the return portfolio for various reasons.
Strategic differentiation and transparency
Under the WTP, pension funds can no longer see real estate as a single generic category but can differentiate by cohort and risk profile. This opens the door to thematic strategies such as student housing, affordable housing, and healthcare real estate, but also creates room for the use of financing (‘leverage’) and value-add investments (which have a higher return perspective but also higher risk). As the focus within the WTP shifts more to individual pension accumulation, funds will also have to provide more insight into the financial and social value of their real estate investments. Data on energy performance, tenant profiles, and impact on liveability are expected to become increasingly important.
Market developments: Scaling up and specialisation
Under the influence of the WTP, we see a trend towards consolidation and scaling up among pension funds. In the future, there will be fewer but larger pension funds. Larger funds, due to their scale, have the power to invest more directly, for example through joint ventures or club deals. Direct real estate not only offers stable returns but also more direct (and efficient) control over returns and social impact—an important element in a system where participants gain more insight into their investments. At the same time, scaling up leads to more competition and specialisation, with an emphasis on sustainability, affordability, and social relevance.
Point of attention: Valuation and liquidity
Real estate remains an illiquid investment, which is relevant for funds with flexible pension schemes. More frequent valuations—such as monthly—can lead to better price determination. Innovations in AI and technology will further improve the quality and frequency of valuations.
Conclusion: Real estate as a valuable strategic pillar in a new pension landscape
The Future Pensions Act creates a unique opportunity for pension funds to reassess their investment strategy. In a system where return, transparency, and social impact are central, real estate offers a solid foundation. It combines stable cash flows with inflation protection and contributes to urgent social tasks such as housing construction and sustainability. Through lifecycle-driven customisation, scaling up, and thematic strategies, real estate can become an even more relevant strategic pillar within the return portfolio than it has been so far.
Conclusion: The Netherlands as a valuable strategic investment market
The Netherlands faces a significant transformation, driven by megatrends such as Demographics & Well-being and Climate & Energy. These challenges require substantial capital investments in housing construction, healthcare real estate, and sustainability. At the same time, the Netherlands offers investors a strong foundation: a stable economy, low national debt, high creditworthiness, and a transparent, mature real estate market. The absence of currency risk within the Eurozone, low management costs, and a favourable tax regime reinforce the home advantage for Dutch investors and make the market attractive for international investors.
The Future Pensions Act also creates new opportunities for real estate within return portfolios, with lifecycle-driven customisation and a focus on social impact. Real estate offers an appealing combination of stable cash flows, inflation protection, and strategic differentiation. Consolidation and scaling up may lead to more direct investments and thematic strategies such as affordable housing, healthcare real estate, and sustainability.
Foreign capital remains essential to achieve the ambitious objectives. The Netherlands can distinguish itself through clear rules, a stable political climate, and an attractive investment regime. The latter does require several political measures, such as lowering the transfer tax and, for example, reintroducing a REIT model. For investors seeking predictable returns, social impact, and a robust hedge against inflation, Dutch real estate is not just an opportunity but a strategic choice.
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