Performance
Market rent and theoretical rent
(€ million, year-end) | 2022 | %-growth | 2021 | %-growth | 2020 | %-growth | 2019 | %-growth | 2018 | %-growth |
Market rent | 401 | 4.1% | 385 | 5.8% | 364 | 8.0% | 337 | (3.71%) | 350 | 32.6% |
Theoretical rent | 376 | 3.9% | 362 | 3.1% | 351 | 6.4% | 330 | (0.60%) | 332 | 27.7% |
The total theoretical rent stood at €376 million at year-end 2022, an increase of €14 million compared with year-end 2021. This was mainly driven by the inflow of new-build homes into the portfolio, the annual rent increase in July, and rent increases due to investments in quality and sustainability in selected assets in the portfolio. The total market rent at year-end 2022 was 6.6% higher than the theoretical rent, in line with 2021.
Average monthly rent per unit
(€, year-end) | 2022 | 2021 | 2020 | 2019 | 2018 |
Average monthly rent | 1,081 | 1,042 | 1,016 | 986 | 945 |
The average monthly rent (residential) had increased by 3.7% at year-end 2022, due to the like-for-like growth of our standing portfolio and changes in the composition of the portfolio due to new inflow and outflow.
Development of total theoretical rent of residential units
The table below shows the impact of the rent increase, reletting and portfolio inflow/outflow on the like-for-like rental growth.[1]
(%) | 2022 | 2021 |
Average rent increase for current tenants | 2.8 | 1.6 |
Re-letting | 0.8 | 0.6 |
Other | 0.2 | 0.2 |
Total like-for-like rent increase | 3.8 | 2.4 |
- 1 Theoretical rent is measured at a single point in time (year-end) and therefore does not correspond with the increase in theoretical rent in 2022 compared with 2021, which you will find in Note 5 of the consolidated financial statements in this report.
Occupancy and tenant turnover
The occupancy rate (in units) declined slightly to 98.6%. The vacancy is mainly temporary due to renovation projects. Tenant turnover in the residential portfolio is now back at pre-COVID levels.
Rental income
(€ million, unless otherwise stated) | 2022 | 2021 | 2020 | 2019 | 2018 |
Gross rental income | 363 | 347 | 335 | 329 | 281 |
Net rental income | 270 | 260 | 251 | 252 | 210 |
Gross/net ratio (%) | 26.1 | 25.4 | 24.9 | 23.4 | 25.1 |
The gross rental income and net rental income of the portfolio increased last year, driven by the inflow of new-build homes, the annual rent increase and rent increases following large renovations. Our operating expenses also increased, largely due to planned maintenance, rising costs and higher non-recoverable service charges. This resulted in an increase of the gross/net ratio to 26.1% in 2022, compared with 25.4% in 2021.
Changes in market value in 2022 (€ million)
The graph above shows the market value development of the investment portfolio. The total value declined to €9.4 billion at year-end 2022 (including IFRS 16). This was 1.0% lower than at year-end 2021, mainly due to Q4 2022 revaluations that reflected the changing macro-economic developments and rising capital market interest rates.
Average market value per unit
(€ thousand, year-end) | 2022 | 2021 | 2020 | 2019 | 2018 |
Average value per residential unit | 335 | 340 | 292 | 278 | 244 |
The average value per residential unit of Vesteda declined by 1.3% to €335 thousand at year-end 2022. This decline was largely driven by negative revaluations, which was partly offset by changes in portfolio composition (inflow/outflow). The average value per residential unit in the Netherlands was €407 thousand at year-end 2022.
The graph below shows a breakdown of the 2022 revaluations throughout our portfolio.
Revaluation in 2022
Gross initial yield
(%, year-end) | 2022 | 2021 | 2020 | 2019 | 2018 |
Gross initial yield | 4.0 | 3.8 | 4.4 | 4.3 | 4.7 |
The gross initial yield of the portfolio, defined as the theoretical rent at year-end divided by the value of the portfolio at year-end (excl. IFRS 16), increased to 4.0% in 2022 from 3.8% in 2021. An increased risk perception, the higher real estate transfer tax and rising interest rates had a direct impact on buy-to-let bids and transactions. This was reflected in market values and therefore created a rising gap between market values and vacant possession values. This therefore led to a decline in the ratio between market values and vacant possession values. The rising interest rates also impacts the owner-occupied market, were we are seeing the first lower transaction prices.