Dutch pension funds are unlikely to significantly increase their investments in private rental housing, as expanding their domestic real estate allocations could come at the expense of portfolio diversification, De Nederlandsche Bank (DNB) has said.

Dutch institutional investors invested around €3.6bn in private rental housing in 2025, accounting for more than half of the estimated annual financing need for new private rental homes.

The majority of this investment came from Dutch pension funds, but DNB said their contribution is not expected to increase substantially further.

The central bank said increasing exposure to Dutch real estate could reduce pension funds’ ability to diversify investments across different countries and asset classes, limiting their capacity to provide additional financing for the country’s housing ambitions.

DNB’s analysis found that additional private capital is needed to meet the Dutch government’s ambition of building 100,000 new homes each year, including around €6.4bn annually for new private rental housing.

While institutional investors are already an important source of funding, the central bank said more investment from other sources, including international investors, will be required.

However, foreign investors have scaled back their activity in the Dutch residential market in recent years, with their share of investment falling from around one-third in 2022 to almost zero in 2025.

DNB attributed this decline to higher interest rates, tax changes and stricter rental regulations, which have reduced the attractiveness of Dutch rental housing investments.

The central bank also noted that private investors have become more cautious, with individuals selling more rental properties than they have purchased since 2023.

Higher interest rates, changes to the Dutch Box 3 tax regime and rent regulation have all contributed to a less attractive investment environment.

DNB said improving policy certainty and creating a more stable regulatory framework will be necessary to attract sufficient private capital to support the country’s housing ambitions.

It recommended greater predictability around regulation, reducing additional municipal requirements for new developments and reviewing the impact of the Affordable Rent Act on investment appetite.

The analysis comes as the Dutch government seeks to accelerate housing construction to address ongoing shortages, with population growth expected to continue driving demand for additional homes.

DNB said achieving these ambitions will require a careful balance between increasing housing supply, maintaining affordable rents and ensuring a sustainable investment environment for market participants.

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