Performance
Market rent and theoretical rent
(€ million, year-end) | 2023 | %-growth | 2022 | %-growth | 2021 | %-growth | 2020 | %-growth | 2019 | %-growth |
Market rent | 438 | 9.3% | 401 | 4.1% | 385 | 5.8% | 364 | 8.0% | 337 | (3.7%) |
Theoretical rent | 394 | 4.8% | 376 | 3.9% | 362 | 3.1% | 351 | 6.4% | 330 | (0.6%) |
The total theoretical rent stood at €394 million at year-end 2023, an increase of €18 million compared with year-end 2022. 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 reversionary potential stood at 11.2% at year-end 2023, which is a significant increase compared with 6.6% at year-end 2022. This stems from the scarcity in the rental housing market and inflation.
Average monthly rent per unit
(€, year-end) | 2023 | 2022 | 2021 | 2020 | 2019 |
Average monthly rent | 1,133 | 1,081 | 1,042 | 1,016 | 986 |
The average monthly rent (residential) increased by 4.7% in 2023, 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
2023 | 2022 | |
Average rent increase for current tenants | 3.7% | 2.8% |
Re-letting | 0.8% | 0.8% |
Other | 0.2% | 0.2% |
Total like-for-like rent increase | 4.7% | 3.8% |
The previous table shows the impact of the rent increase, reletting and portfolio inflow/outflow on the like-for-like rental growth.[1]
- 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 2023 compared with 2022, which you will find in Note 5 of the consolidated financial statements in this report.
Occupancy and tenant turnover
The occupancy rate (in units) increased to a solid 99%. The vacancy is mainly due to the duration of renovation projects. Tenant turnover in the residential portfolio was 12%.
Rental income
(€ million, unless otherwise stated) | 2023 | 2022 | 2021 | 2020 | 2019 |
Gross rental income | 378 | 363 | 347 | 335 | 329 |
Net rental income | 284 | 270 | 260 | 251 | 252 |
Gross/net ratio | 25.2% | 26.1% | 25.4% | 24.9% | 23.4% |
The gross rental income and net rental income of the portfolio both increased last year, driven by the inflow of new-build homes, the annual rent increase and rent increases following large renovations. Our property operating expenses (including service charges) also increased, largely due to rising cost levels driven by inflation, higher property related taxes and higher non-recoverable service charges and minor maintenance. However, rental revenues increased more, which led to a reduction in the gross/net ratio to 25.2% in 2023, compared with 26.1% in 2022.
Changes in market value in 2023 (€ million)
The previous graph shows the market value development of the investment portfolio. The total value declined to €8.7 billion at year-end 2023 (including IFRS 16), which was 7.4% lower than at year-end 2022. This mainly reflects the current investment climate, mainly driven by the changed macro-economic climate and higher interest rates. Additionally, the local market uncertainty due to upcoming potential regulation also has increased the risk perception. Throughout the year, the increased risks were reflected in projected growth rates and discount rates. This trend was particularly evident during the first half of the year, after which the downward trend began to level off in the second half of the year as interest rates stabilised.
Average market value per unit
(€ thousand, year-end) | 2023 | 2022 | 2021 | 2020 | 2019 |
Average value per residential unit | 308 | 335 | 340 | 292 | 278 |
The average value per Vesteda residential unit had declined by 8.2% to €308 thousand at year-end 2023. This decline was largely driven by negative revaluations, which was partly offset by changes in portfolio composition (inflow/outflow). The vacant posession values declined with 1.4%, demonstrating a limited impact of the higher interest rates. Overall in the Netherlands, the average value per residential unit was €422 thousand at year-end 2023 (Source: Statistics Netherlands).
The graph below shows a breakdown of the 2023 revaluations throughout our portfolio.
Revaluation in 2023
Gross initial yield
(%, year-end) | 2023 | 2022 | 2021 | 2020 | 2019 |
Gross initial yield | 4.6 | 4.0 | 3.8 | 4.4 | 4.3 |
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 4.6% in 2023 from 4.0% in 2022. An increased risk perception 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 widening gap between market values and vacant possession values.