Market risk overall

Due to the sudden growth in inflation 2022 was marked by sharp policy rate increases by central banks. This led to valuation corrections in real estate from Q4 2022 onwards. Policy rates were further increased in 2023, albeit in a more moderate way as central banks were slowly regaining control of inflation. The present political instability in the Middle East will also increase geopolitical instability, with already direct effects visible in supply chain related risks. Although the economic consequences are yet unknown, a reignition of inflation is lurking.

Bouwinvest monitors and evaluates these market circumstances on a continuous basis and they are taken into account in both the daily management of the Fund and in the investment and divestment decision processes.

In the political landscape of the Netherlands, but also in an international context, we are seeing a shift towards the political ‘right’ and further polarisation. Furthermore, following last year's elections the Netherlands is currently governed by the outgoing administration. This leads to ambiguity on its overall vision on the real estate market and more specifically on (new) regulations.

Credit risk

Within the area of credit risk, no material risks occurred in 2023.

Liquidity risk

Within the area of liquidity risk, no material risks occurred in 2023.

Business risk

Tax risk

Fund for Mutual Account (FMA)

The Fund was restructured into a fund for mutual account (FMA) on 1 January 2023. Due to its fiscal transparency, as from this date the Fund is not subject to corporate income tax.

Increase in real estate transfer tax (RETT) rate

It is not possible to specify the exact impact on the real estate market of the increase in the RETT rate as per 1 January 2023 due to market volatility.

Legal & Claim Risk

Claim Loyens & Loeff (Hourglass)

Ever since Loyens & Loeff moved into the building, there have been persistent delivery points that have led to a claim from the tenant due to reduced enjoyment of the rental. The Fund has presented Loyens & Loeff with several suggestions for additional building investments which could be of value for Loyens & Loeff as compensation for the inconvenience that the building defects have caused over time. So far, Loyens & Loeff have not responded to the suggestions made. The parties agree that a final resolution of the claim can only take place after all technical issues have been resolved.

Dispute over maintenance costs (SOSA)

Following the ruling of the Supreme Court in Q3 2022 and based on the earlier request made by co-owner Stichting Olympisch Stadion Amsterdam (SOSA), an independent expert has launched a technical investigation into the relationship between leaks from the past and the concrete damage that was discovered in 2018. The Amsterdam Court of Appeal will use the technical report for its assessment of the distribution of repair costs related to the concrete damage among the co-owners. At the same time, it will have to be legally determined whether and to what extent the Fund failed to carry out maintenance if this could have prevented the concrete damage. A new court hearing will be scheduled in Q1 or Q2 2024.

Operational risk

Within the area of operational risk, no material risks occurred in 2023.

ESG risk

Within the area of ESG risk, no material risks occurred in 2023.

Compliance risk

Within the area of compliance risk, no material risks occurred in 2023.

There were twenty-eight data breaches with respect to the processing of personal information. Five of these were reported to the regulator, the Dutch Data Protection Agency. Some of the data breaches occurred at processors, such as property managers. All data breaches were investigated and, where necessary, additional control measures were taken. Bouwinvest has informed the data subjects.