1. The real size of the Dutch real estate investment market An estimate of the total professionally managed real estate market
Bert Teuben
Rob Courtens
Eindhoven, June

2. Agenda Introduction Literature review Real estate market size estimate
Top down
Bottum-up
Theoretical estimates
Based on transactions
Debt and equity
Market structure

3. Introduction Importance of estimate market size for total sector:
More information on the different type of investors and their influence on the real estate market and the economy;
For foreign investor the market size gives more information on the (potential) liquidity and attractiveness of a country;
More transparency on equity and debt in the market is essential.
Additional IPD goals:
Market coverage for IPD indexes;
Weighting of countries in pan-European and global indexes;
Indentifying missing investors in IPD- indices.

4. Previous literature
Top down approach from different sources , mainly government data (Callender e.a., 1996)
Based on a relation to the GDP in a country (Ling, e.a. 1999)
Difference between investible and invested

5. Theoretical framework Real estate market
Banks
End investor
Capital market
RE Debt
RE Equity
RE Derivatives
Fund of funds
Listed
Non-Listed
Direct
RE market
Assets
Corio, Wereldhave, Unibail, Vastned, Nieuwe steen etc.
Eurindustrial, ING funds, Achmea funds, Altera, Q-park, Bouwfonds, Ping properties, Bouwinvest
Institutional:
Spoorweg, MN services
Private:
Kroonenberg, Mayfield

6. Agenda Introduction Literature review Real estate market size estimate
Top down
Bottum-up
Theoretical estimates
Based on transactions
Debt and equity
Market structure

7. Top down not market value, but includes
social housing and owner occupied;
invested = € 110 billion (market value)
Total stock
€ billion
Residential
€ billion
Non-residential
€ 428 billion
includes owner occupied, agricultural land and buildings, government assets, factories
Statistics Netherlands (CBS)

8. Bottom up Dutch and non-domestic investors:
60 pension funds and insurance companies with direct investments
32 listed funds
348 non-listed funds
89 private investors with portfolios of over € 100 million
Total € 118 billion, but not completely sure on covering all real estate owners

9. Theoretical estimate Investible 45% of GDP (Hordijk)
45% of € 592 billion is € 266 billion
Invested 36% of investible
36% of € 266 billion is € 96 billion

10. Based on transactions
Only for commercial real estate (offices, retail and industrial) transaction are recorded over long time-periods (average annual figure € 5.8 billion);
Average holding period of sold assets during the period was 15 years for commercial real estate (source IPD/ROZ real estate index)
15 x € 5.8 billion =
€ 87 billion
Source: Jones Lang LaSalle

11. Summary real estate market estimate
Approach
Estimate
Missing
Top-down
Residential € 110 billion
Offices € 53 billion
Retail, industrial and other
Bottom-up
Professional managed € 118 billion
Small private investors
GDP
€ 96 billion
Transactions
Commercial real estate € 87 billion
Residential
Total market size is € 197 billion (€ 87 billion commercial plus € 110 billion residential) of which € 118 is professional managed
DTZ (2011) mentions a total market size of € 196 billion

12. Agenda Introduction Literature review
Real estate market size estimates
Top down
Bottum-up
Theoretical estimates
Based on transactions
Debt and equity
Market structure

13. Equity – top down Real estate equity investments by Dutch institutional investors also non-domestic investments
Source: Statistics Netherlands

14. Equity – top down Real estate investments by Dutch institutional investors also non-domestic investments
Source: Statistics Netherlands

15. Equity – bottum up Equity in real estate investments in the Netherlands in € billion
Investor
Type of investment
Estimate of equity
Pension funds and insurance companies
Listed funds
€ 3 billion
Non-listed funds
€ 20 billion
Direct holdings
€ 18 billion
Private investors
€ 4 billion
Direct holdings (only > € 100 million)
€ 15 billion
Direct holdings (only < € 100 million)
Unknown
Non-domestic investors
Listed, non-listed and direct investments
€ 12 billion
Total Equity
€ 72 billion

16. Debt – top down Debt determined by annual reports banks - € 55 billion Dutch banks > only Dutch real estate and no development exposure - € 9 billion non-domestic banks - € 1 billion corporate bonds - € 4 billion direct CMBS/RMBS transaction no securitisation Total debt € 69 billions

17. Debt – bottom up Debt in real estate investments in the Netherlands in € billion
Investor
Type of investment
Estimate of debt
Pension funds and insurance companies
Listed funds
€ 3 billion
Non-listed funds
€ 7 billion
Direct holdings
€ 0 billion
Private investors
€ 10 billion
Direct holdings (only > € 100 million)
€ 17 billion
Direct holdings (only < € 100 million)
Unknown
Non-domestic investors
Listed, non-listed and direct investments
€ 9 billion
Total Debt
€ 45 billion

18. Agenda Introduction Literature review
Real estate market size estimates
Top down
Bottum-up
Theoretical estimates
Based on transactions
Debt and equity
Market structure

19. Market structure Debt and equity in real estate investments in the Netherlands in € billion
Investor
Type of investment
Estimate of equity
Estimate of debt
Total
Pension funds and insurance companies
Listed funds
€ 3
€ 6
Non-listed funds
€ 19
€ 7
€ 26
Direct holdings
€ 18
€ 0
Private investors
€ 4
€ 10
€ 14
Direct holdings (large > € 100 million)
€ 15
€ 17
€ 32
Non-domestic investors
Listed, non-listed and direct investments
€ 12
€ 9
€ 22
Total market professional managed real estate investments
€ 72
€ 45
€ 118
Top down approach (total real estate investments)
€ 128
€ 69
€ 197
Small private direct investors (< € 100 million)
€ 55
€ 24
€ 79

20. Debt (non-domestic banks)
Market structure Market structure of professional managed real estate in the Netherlands (excluding private investors < € 100 million) amounts in € billion 72
Debt
(Dutch banks)
Equity
(Dutch) 96
Debt (non-domestic banks)
Equity
(non-domestic) 9 12 37 59 38 35
118
Dutch real estate
Non-domestic real estate
Conclusions
LTV 40% is low compared to European average of 60%
Size of € 118 billion is larger than earlier estimates
Low Dutch exposure by non-domestic investors (18%)
Large non-domestic exposure by Dutch investors (43% of total exposure)

21. Further research
Carry out more research on market sizes in other countries
Carry out market sizes per sector within a country (offices, retail, industrial and residential)
Estimate isn’t stable over time so yearly updates would be preferred
Probably not all private investors and separate accounts are included in the figures
Market size of owner occupied market for commercial real estate is unknown (retail, offices and industrial)

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