Outlook

The higher risks associated with the real estate market were underlined by the continued yield decompression throughout 2023. The uncertain impact of rent regulation, higher construction costs and rising interest rates created a weaker real estate market environment. The downward trend that started in mid-2022 continued in the following one and a half years. The last quarter showed signs of a gradual trend toward stabilisation of real estate valuations.

The long-term trend for the ARC Fund is likely to remain favourable based on the significant shortage of housing and increasing demand for the unregulated rental market. The modern and relatively energy efficient portfolio is expected to remain resilient in the current market environment, which is also underlined by the low vacancy rates for the standing portfolio and the low level of rent arrears. In addition, the ARC Fund is well capitalised for the medium term and maintains a low LTV, which provides optionality to pursue investment opportunities when they arise. In the short term, further growth of the ARC Fund is likely to be hampered due to a lack of feasible new projects and higher cost of capital.

For the first half year of 2024, we foresee a gradual reversal of the negative trend which is amongst others driven by a pick-up in investment market activity and limited supply for a rental segment which is in high demand. 

Amsterdam, the Netherlands, 19 April 2024

H-W. Wensing, Fund Director

G.N. von der Thüsen, Director Finance and Risk

D. Wedding, Portfolio Manager