Report of the Board of Directors


Multifunctional and sustainable the future of office

The Fund's main focus in the years ahead will be to optimise the portfolio, by investing in sustainable and multifunctional buildings that can accommodate multiple tenants or can be refitted to do so. These office buildings will be in good locations with sufficient other facilities, such as day-care centres, shops, cafes, and other leisure facilities. They will also offer easy access by road, public transport and by bike.

Economy may boost demand for office space

The Dutch economy is expected to see modest growth again in 2015, and unemployment is falling, which could boost demand for office space in popular locations. On the other hand, vacancy rates could increase if corporate cost cutting continues and companies look to make more efficient use of office space. We expect to see the polarisation in the office market increase in 2015 and beyond.

Randstad cities on the winning end

Locations in the Randstad urban conurbation that are likely to benefit from these trends could be locations such as the Beatrixkwartier and the city centre of The Hague, Amsterdam city centre, Amsterdam Zuidas and the IJ riverside location, the Utrecht Central Station area and the Rotterdam Central Business District. Although some transactions in the Dutch office market are evidence of a growing risk appetite from foreign investors, most transactions still involve assets with safe long lease terms. The Fund considers depreciated assets in prime locations with short remaining lease terms attractive new investments, as they are an opportunity to add value through targeted investments and active asset management.

Rental growth on the horizon

We could see a return to rental growth in 2015 and 2016, boosted by rising occupancy rates in top locations thanks to the expected demand for high-quality offices. Competition for prime office real estate may become even fiercer over the next year, as tenants pro-actively try to lock in leases at current competitive rates.

Investment key to high occupancy

The Fund’s focus will be on its occupancy rate, which will require investment in some assets to improve their letting potential. We will be looking at various options in the next year, including the introduction of additional service packages and other add-ons. And of course any investments in renovations will be used to increase the sustainability of assets.

Pro-active lease extensions

We will be keeping a very close watch on the expiration of significant leases throughout the portfolio and expiring leases, more specifically in WTC The Hague, Beurs-WTC Rotterdam, De Lairessestraat and the Olympic Stadium in Amsterdam. We are in constant contact with our tenants to discuss their current and future office needs.

Because of the recovery of the Dutch economy, the bottomed out prices, the quality of our portfolio, the Fund's optimisation strategy through acquisitions and divestments, as well as active management of our assets, the Fund expects to realise its long-term average annual target return of 7%.

Amsterdam, the Netherlands, 16 March 2015

Bouwinvest Real Estate Investment Management B.V.

Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments

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