Last year was an excellent year for the Residential Fund. Not only did we deliver an outstanding performance in absolute terms, we also outperformed the IPD index for the sixth year in a row. Very importantly, the total return of 12.5% was driven by very good direct and indirect returns. Of course, it was a very good year for the residential real estate market as a whole, but I believe our continued outperformance shows that we are still ahead of the game. Once again, we have reaped the benefits of our commitment to this market. We continued to invest in improving the quality of our portfolio – even during the bad years – and that is now paying off in trumps.
Last year, we once again invested in our core regions, in new-build projects and in apartments and family homes with high sustainability ratings. At the same time, we invested time and effort in improving our marketing department and thanks to those investments all our new-build projects were fully let before completion. Our marketing people have conducted a lot of research, so they know who our tenants are, what they want and where they want to live. If you combine that with the expertise of our acquisitions team, we have a very well-oiled machine. We managed to invest some € 470 million in new properties last year, which is quite a feat in what is now a fiercely competitive market. We were very successful in closing some excellent deals, such as the Haarlemmerweg and Nautique Living in Amsterdam and projects in our other core cities.
The underlying fundamentals are still very strong for the Dutch residential market and we firmly believe that it will continue to be an excellent investment category for institutional investors for many years to come. Ongoing urbanisation and the strong rise in the number of single-person households is increasing demand for liberalised sector rental homes, especially in the larger cities of the Randstad. There is a huge and growing shortage in this sector, which will continue to create some wonderful opportunities for us.
On top of this, thanks to government measures now in effect, the residential market is a much more level playing field. Right now, the liberalised rental sector accounts for a mere 4% of the total residential market, but that could grow exponentially in the coming decades. We expect to see huge amounts of investment flowing into this market, and we aim to take advantage of the many opportunities these fundamentals will create. Of course, we will make no concessions in terms of the quality of our portfolio. We will maintain our focus on core regions, on sustainable properties, tailored to the needs of our tenants, so we can maintain our very high occupancy rate.
Right now, we are seeing that a lot of investors share our faith in this market. Many seem to have had a bit of a wake-up call last year and they are very keen to invest in residential real estate. We welcomed no less than eight new investors in the Fund this year, bringing the total to 12, including our anchor investor bpfBOUW. The flipside of this is that these investors will have to wait a while for cash out, as we are only investing in newly built properties. But if you want to invest in quality and book an average annual return of 6% you have to wait until the new-build projects are completed.
And we intend to improve the quality of our portfolio every year. We expect to invest a further € 200 million a year for the next three years. That is less than in the past two years, as the market is getting much more competitive and it will be more difficult to find the quality projects we demand. But as I said, the market is also growing, which is why we are optimistic about the investment opportunities. The market is there and growing; the tenants are there; the investors are there; the returns are there and, of course, Bouwinvest is there. That’s an excellent cocktail for the future.
I would like to close by thanking everyone who worked on the residential portfolio for their hard work, dedication and their excellent performance last year. It was a real team effort and something we can all be proud of.
Dick van Hal
Chairman of the Board of Directors