Solid foundation in uncertain times; housing and care real estate

Posted on 16-04-2020 by F. Geurtsen

The coronavirus will have a major impact on the economy. Amid all the hectic activity, real estate appears to be generally stable. In particular, (rental) properties and healthcare properties are not directly affected by the economic effects of the coronavirus. All interest payments therefore continue unimpeded at Crowdrealestate. This is unlike many other providers with hospitality, retail, tourism and corporate real estate in their loan portfolios.

About 95% of Crowdrealestate's current loan portfolio consists of (rental) housing and healthcare real estate. These two property segments are not or hardly directly affected by the economic effects of the coronavirus. Indeed, the associated lockdown does not apply to (rental) residential and healthcare properties. The cash flows of these property segments remain stable to date.

In the long term, however, it is inevitable that the coronavirus will have an impact on the general economy. As is well known, the CPB has therefore adjusted the previously predicted economic growth of 1.4% to an economic contraction of between 1.2% and 7.7% in 2020. This depends on the duration of the corona crisis and the lockdown associated with it. The question now is to what extent this economic contraction will affect Crowdrealestate's ongoing and future projects.

In any case, the great thing about Crowdrealestate's projects is that demand from the user side, or tenants of the residential and healthcare properties remains incredibly high. Both before, during and after the corona crisis. After all, supply is already very limited. For Crowdrealestate's projects, this is beneficial. It keeps the occupancy rate optimal and ensures continuity of operation.

The above is reinforced by the fact that the changing growth outlook of the economy will also have plausible consequences for the construction sector. Consequently, the Economic Institute for Construction (EIB) expects construction output to fall drastically for the next two years. Similar to the previous crisis and those before it. Only in 2022 is new construction production expected to rise again. As a result, the supply in (rental) housing and healthcare real estate will remain limited in the coming period.

Crowdrealestate will hardly deviate from its original underwriting policy in the coming period and continue to place projects that mainly meet people's basic needs, namely housing and healthcare. The funding size in relation to the underlying value will thereby be kept limited, so that any decreases in value can be absorbed. The new projects under preparation comply perfectly with this