Amsterdam’s efforts to regenerate the oldest part of the city centre that includes the “Red Light District,” an area known for its sex and drugs trade, have received a €60m boost following investment by two Dutch pension funds advised by institutional property manager Syntrus Achmea Real Estate & Finance.
Henk Jagersma, CEO of Syntrus Achmea RE&F, said: “Dutch pension funds have a duty towards their members to maximise their risk-adjusted investment returns in a socially responsible way. We believe that by applying Impact Investing principles in Amsterdam’s city centre we can achieve a solid uplift in property values for a low level of risk. At the same time, we can deliver a much safer and more attractive neighbourhood for residents and visitors alike.”
The Dutch Agricultural Workers (Landbouw) and Rabobank pension funds have taken a 35% stake in the vehicle, covering the initial portfolio of 133 buildings, which was set up in collaboration with Amsterdam’s municipality and social housing corporation Stadgenoot to transform the area into an attractive residential neighbourhood as well as a vibrant hub for creative businesses and retailers. The fund has an annual dividend income target of 4.0% and its portfolio could expand considerably in the upcoming years.
The partners in this public-private Impact Investment fund – called 1012 Inc. after the postal code for the downtown neighbourhood – aim to help regenerate the area with targeted investments and active asset management, and by cooperating with entrepreneurs and residents in further improving its liveability.
Amsterdam is presenting this as a prime example of “impact investing” in real estate, strategies that deliver specific social or environmental benefits as well as a financial return.
The 1012 Inc. Fund’s mission is shake-up the existing tenant mix and renovate, redevelop and refurbish properties, particularly in the core Red Light District that lies to the east of Damrak, the street that leads from Amsterdam’s central station to the main Dam Square.
As a condition of the agreement for their investment in 1012 Inc., the Landbouw and Rabobank pension funds have also separately, outside the project, received preferential negotiating rights with Amsterdam Municipality for four residential development locations around the city’s main A10 ringroad. These sites have a value of about €150m and will be used for the construction of approximately 750 mid-priced rental apartments.
Amsterdam’s residential market has become a magnet for international and domestic investors as a shortage of owner-occupier and rental housing supply, coupled with strong demand from the city’s growing population and the expansion in the number of single households, has led to a severe shortfall in the approximately 11,000 new homes that need to be built each year.
