Vesteda is interested in the higher-end of the rental housing market. Because of recent demographic developments and growth due to prosperity it is a market characterized by progress. Vesteda’s strategy is oriented toward reducing scale and increasing the quality. When Director- Chairman Huub Smeets joined the company in 2000, Vesteda’s portfolio consisted of approximately 50,000 housing units; this has been reduced to nearly half with 28,000 units. Despite the reduction in scale, the balance sheet value of this Dutch housing fund has, with its Triple-A rating, grown some 15% to €4.6 billion. The results have been especially good over the past five years, with an average yield in excess of 12%. In 2006, Vesteda actually showed a yield of over 14%, an excellent result that outperforms the Dutch Residential Benchmark (ROZ/ IPD Index).

New kid on the block
Thus far, Vesteda has focused exclusively on the rental housing market, however, that is about to change. In 2008, as the new kid on the block, Vesteda will begin offering not only rental units but also owner-occupied housing. “The first 500 homes will be delivered in 2011,” explains Smeets. He points out that this is just an average number. “One year we’ll sell some 700 homes, but if that doesn’t work out because of various market conditions, then the following year we might only deliver a few hundred. What we’re talking about here is that we have to keep working on acquisitions, but, at the same time, be able to react flexibly to the market. We want to take advantage of the latest economic trends,” Smeets adds. Because of his academic and business backgrounds (he studied private law and town planning and is the former director of urban development and planning in Maastricht) he knows that when the economy is performing poorly the owneroccupied housing market is the first to suffer. The rental market usually follows about a year and a half later. But as soon as the economy begins to pick up, the buyers market is the first to enjoy its fruits. “Then you see that there is renewed trust in the economy, that people want to purchase larger homes and that they begin coming to us again.” By also offering owner-occupied housing, Vesteda wants to increase its flexibility. “We will simply continue to develop splendid housing complexes, which in the Netherlands usually has a delivery time of five to seven years from start to finish. But we can decide until six months before delivery how many and which portion of these complexes will be owner-occupied or rental units. This period is ultimately determined in the completion phases. You can also still alter the lay-out of a rental unit, for instance, by installing a nicer kitchen or finishing the walls in another style.” This provides us with enough flexibility to anticipate changing market conditions.

These new types of contracts are a reaction to increased client demands. Smeets notes, “This is the most important difference between the ABP Woningfonds of the past and the Vesteda of now: We have become more client-oriented and commercial.” But Vesteda also tries to meet the new demands of clients on other fronts as well. For instance, by reacting to the needs of the growing senior citizen population. Vesteda has managed to satisfy those needs by delivering custom-built units. This can be done by integrating a fitness center and a sauna into the housing complex, for instance. Director Smeets, however, does not expect the emergence of elderly communities in the Netherlands. “Senior citizens in the Netherlands are not that interested in total senior complexes or communities. Seniors don’t want to feel old; they want to feel young and thus prefer to be surrounded by young people. But if they do need assistance, they have to be able to find it quickly, and these units will already be designed with this in mind.” Vesteda continues to gain more insight into its target groups. “We really focus on our target groups. We have already spent a few years doing this, but now we are more aware of what products people are interested in. This is reflected in our buildings. Our outdoor spaces, the balconies and terraces, continue to improve, while the entrances are more charming.”

Public space also plays an important role in the quality of living, according to Vesteda. First the streets and parks have to be developed. “These are things that the inhabitants value, which, in turn, increases their trust in the neighborhood, which, in turn, means that criminality does not have the chance to develop.” Public space has to be developed early and done properly. “I constantly tell my colleagues that to be able to sell and rent units, especially if you want to realize this prior to the delivery date, you have to have your plans for the public space in order. The earlier this is done, the better.” This notion has only taken root in dribs and drabs here in the Netherlands, concludes Smeets. “The lowest priority for this idea is found in the Randstad area. Here people end up living in a wilderness for months after the delivery date. Take the Wilhelminapier in Rotterdam, for instance, where one finds the beautiful Montevideo building (a design by Francien Houben of Mecanoo Architects), part of which we have rented out. The same can be said for IJburg in Amsterdam. In the early phases of IJburg, people were living in what seemed like the middle of nowhere for months at a time in some of the most expensive homes in the Netherlands.” Smeets also has some positive examples such as the Overhoeks in Amsterdam Noord. “ING and the City have really taken the lead there, so that the public space has already been clearly laid out. This green zone is really the ‘sunny side’ of Amsterdam.”

Depending on the city, Vesteda also makes substantial investments of between €400 million and €1.5 billion, based on the long-term vision of the city. In the coming 10 years in Amsterdam, the investor’s developer annex at Vesteda plans to build some 4,000, but maybe even up to 5,000 housing units. “We are presently busy at 15 sites in the capital, says Smeets. “One of the most dramatic projects is Mahler4, which is focusing on housing for ex-pats.” But Vesteda is also active in The Hague. “We have presented plans to invest €1 billion in The Hague,” adds Smeets. “This plan has been well received by city councilor Marnix Norder.” Vesteda wants to collaborate to help put The Hague on the map as a world-class city by the sea. “The demand for more expensive rental units in The Hague – which is due to the presence of the embassies, the courts and related offices – is twice as high as the present supply,” says Smeets. “We have now selected 10 good neighborhoods where we want to deliver higher-quality housing. We are in the race to win the Norfolk location.” More rental housing at the higher-end of the market segment is good for the city, according to Smeets. “These sorts of developments means that more than half of the renters will be from outside the city. They are returning to the cities, whether it is Rotterdam, The Hague or Maastricht. That is a good sign, and that’s how cities become stronger.”

Print this story (PDF)
From the Holland Real Estate Yearbook 2007 (bookstore)