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Risk management

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Market risk

Market risk overall

From a market perspective, last year was marked by significant geo-political, financial, social and environmental turbulence. As we emerged from the worst of the Covid-19 pandemic, and economies were showing clear signs of recovery, we were faced with Russia’s invasion of Ukraine. Next to the human tragedy and economic uncertainty that this created, it also ignited inflation. The reaction of the Fed, ECB and others has been a series of rapid and significant interest rate rises, pushing the world’s economies towards recession. Consumer and investor confidence deteriorated rapidly, and so, subsequently, did asset pricing. These changed market circumstances are evaluated on a continuous basis, and are taken into account, both in the daily management of the Fund and in the investment and divestment decision processes. 

Market liquidity risk

As part of its continuous portfolio optimisation, together with three redemption requests the Fund received, the Fund initiated a sales process for a number of assets that no longer met the Fund's objectives. Following the marked change in market conditions, the Fund noted a significant reduction in market liquidity. Taking into account the Fund's best interests, not all the assets that were put on the market have been sold. This reduced market liquidity is taken into account in both the strategic and tactical management of the Fund.

Credit risk

Within the area of credit risk, no material risks occurred in 2022.

Liquidity risk

Within the area of liquidity risk, no material risks occurred in 2022.

Business risk

Business environment risk

Rental market regulation changes

On 9 December of last year, the Minister of Housing and Spatial Planning's published parliamentary letter on the proposed regulation of the mid-rental segment and the modernisation of the housing valuation system (WWS). The minister aims to introduce the new regulations by 1 January 2024.

The proposed measures in the minister’s plan are primarily related to an extension of the current housing valuation system (WWS) up to 187 points (equivalent to a rent level of approximately EUR 1.025 per month), an inflation-indexed rent level for new mid-rental segment leases and the allocation of additional points for objects with energy label A and better.

Given the average turnover rate, an expected reduction of 0.23% of the gross rental income of the total portfolio is expected in the first year. The definitive measures are however still uncertain as parliament has yet to decide on this regulation.

The maximum rent increase in 2023 for the liberalised segment will be CLA (Collective Labour Agreement) plus 1%. This will be 4.1%.

Nitrogen emissions

The negative ruling on 2 November 2022 by the Council of State (Raad van State) related to a nitrogen emissions exemption could lead to a reduction of new real estate developments in the market. Furthermore, developments for which a final building permit is yet to be received could be delayed, or in a worst-case scenario be at risk of not starting at all.


The Dutch government announced that as of 1 January 2025 Fiscal Investment Institutions (FIIs) may no longer invest in directly held real estate, the so called real estate measure. The timing of this announcement was slightly surprising, as it was not in line with the conclusions of the evaluation of the FII regime by the Dutch Economic Research Foundation (SEO) earlier in 2022. At the same time, Bouwinvest had already been anticipating such a change of law for a number of years.

The measure implies that FIIs holding real estate directly will become subject to corporate income tax at the ordinary rate (25.8% in 2023). Bouwinvest is therefore preparing to restructure the Fund into the legal form of a so-called closed Fund for Mutual Account (FMA). Given its fiscal transparency, the closed FMA prevents (double) taxation for investors and is therefore the most appropriate alternative for an FII. Since the government also confirmed that it should remain possible to structure an FMA as ‘closed’, and thus tax transparent, this is expected to be a sustainable alternative going forward. 

The government furthermore announced a conditional exemption from real estate transfer tax for the transfer of real estate in the context of a restructuring directly related to this measure. This conditional exemption should come into effect on 1 January 2024. Bouwinvest welcomed this announcement, as such an exemption should remove one key uncertainty.

A draft bill on the real estate measure was submitted for public consultation in early 2023. Bouwinvest will continue to provide feedback through industry groups. A final law proposal is expected to be published on Budget Day (September 2023). Bouwinvest will decide on the exact date of the envisaged restructuring in the course of 2023.

Increase in rate real estate transfer tax (RETT) rate

As per 1 January 2023, the RETT rate for investors was increased to 10.4% (was 8%). The exact impact on the real estate market is not yet clear.

ESG risk

Within the area of ESG risk, no material risks occurred in 2022.

Operational risk

Within the area of operational risk, no material risks occurred in 2022.

Compliance risk

Within the area of compliance risk, no material risks occurred in 2022.

There were 21 data breaches with respect to the processing of personal information. Four of these were reported to the regulator, the Dutch Data Protection Agency. Some of the data breaches occurred at processors, such as property managers. The data breaches were caused by, amongst others, incorrectly sent e-mails. All data breaches were investigated and, where necessary, additional control measures were taken. In cases where this was necessary, Bouwinvest has informed the data subjects.