Outdated browser

You are using an outdated browser. DNB.nl works best with:

Pension funds suffer losses on real estate


After years of price gains, pension funds suffered losses on their real estate investments in 2022, DNB figures show. Overall, the value of these investments fell by over €14 billion. Listed real estate in particular fell in value, while losses in directly held properties were limited. Thanks to the stronger US dollar, the value of (foreign) real estate fund units denominated in euro even increased slightly.

Published: 14 March 2023

Dutch pension funds had a total of €158 billion in real estate investments on their balance sheets at the end of 2022, representing 10.9% of their invested assets. They hold part of this directly on their own balance sheets or on the sheets of related Dutch investment funds (€47 billion). They also hold real estate indirectly through domestic and foreign investment fund units, in particular real estate fund units (€67 billion). Finally, they invest in “listed real estate”, i.e. listed companies managing real estate (€44 billion).

Relatively large losses in listed real estate

Of the on balance €14.6 billion loss suffered by pension funds on their real estate investments in 2022, €15.1 billion is related to listed real estate (-22% of the opening balance sheet). These losses occurred in early 2022, with a peak in the second quarter. The losses were mitigated by exchange rate effects, especially the stronger US dollar, without which the losses amounted to €17.9 billion.

Losses for directly held properties were limited to €0.7 billion (-1.5% of book value), while for real estate investment fund units a positive value development of €1.2 billion (2.2%) was recorded for the full year. This was entirely due to the aforementioned exchange rate effects; the net price effect amounted to €-0.4 billion.

Source: DNB statistics

At De Nederlandsche Bank, we independently compile statistics on the Dutch financial sector and economy. This article is based on these statistics. More information on our statistics and all dashboards can be found on our Statistics homepage.

Pricing plays an important role in price developments for the different types of real estate investment. The price of listed real estate is determined daily on the basis of supply and demand. Market information and changes in future expectations are directly reflected in the price. Prices of investment fund units generally react less quickly, especially in the case of closed-end funds that investors cannot divest from at short notice. The price mutation of directly held real estate also lags behind, as the valuation of properties takes place only a few times during the year. 

A large share of directly held properties are residential buildings

The share of pension funds’ real estate held directly, or indirectly through related Dutch investment funds, is mostly residential. Less than a third consists of offices, retail properties and other real estate. All of these properties are almost exclusively located in the Netherlands.

No data on the type of properties are available for investments held indirectly through foreign real estate investment funds and listed real estate. However, we do know that these real estate investment funds and listed real estate companies are mostly foreign, and mainly based in the United States.

Pension funds’ investment results over 2022

2022 was a weak investment year for pension funds. Falling stock exchange prices resulted in price losses on equity investments of €46 billion (-18.3% of the average balance sheet) and on investment funds of €70 billion (-9.1%). In addition, bond investments fell by €141 billion (-22.4%) due to sharply higher interest rates, and losses of €165 billion were recorded on (mainly interest rate) derivatives. These price losses were marginally offset by the higher US dollar exchange rate, which meant the value in euro rose by €18 billion (1.0%). 

Nevertheless, the impact on the financial position of pension funds was relatively limited, as liabilities also fell sharply (€375 billion). These results are related by the fact that pension funds hedge the interest rate risk on their liabilities by investing in bonds and entering into interest rate derivative contracts. As pension funds on average cover a part of the interest rate risk, the funding ratio of pension funds on balance rises alongside rising interest rates.

Discover related articles