Government policy is to encourage people to live independently in their own homes for as long as possible. As a result, many residential care facilities are no longer financially viable. The decline in revenue has left many unable to meet their financial obligations. At one stage, the total property-related debt of the care sector was estimated at 2.2 billion euros. A compensation claim was made for this amount. TNO examined the accuracy of the figure and concluded that the actual amount was far lower. The ministry then instructed TNO to clarify the claim.
TNO developed a real estate model in Excel which was coupled to an online map. The model included detailed information about the buildings concerned: type, past loan repayments to banks, running costs, lost revenue, any interim renovations and (potential for) repurposing. Henk Sijsling, senior real estate researcher and financial engineer at TNO: “The design of the model allows for all input to be variable. This allows the effects of higher or lower values to be assessed with a high degree of accuracy and shown on the online map. Eventually, the facts and figures enabled the claim to be reduced to 200 million euros.” ‘Care Institutions on the Map’ has now been expanded to include information about care providers’ financial situation, the quality of care, the implications of government policy for real estate usage, and demographic information at the regional level.
The Randstad conurbation in the west of the Netherlands has traditionally attracted most interest from property investors. Research reveals that another region – the Achterhoek in the east of the country – also has a number of prime triple-A locations which have thus far escaped the attention of national or international investors. Institutional investors such as pension funds have limited time in which to study an investment opportunity in depth. They often rely on information provided by local authorities and property developers. In some cases, that information may be incomplete or inaccurate. The investors therefore take their money elsewhere, generally to another country. This is why ‘Assets on the Map’ is now being developed. It will reveal locations with high potential for future value creation and the ability to contribute to the regional economy. It will also show the mix of functions through which this could be achieved.
Like its predecessor ‘Assets on the map’ will be an integrated multidisciplinary model linked to an online map. The model will process demographic data and information about the built environment, disposable income, mobility, the regional economy and (cultural) amenities. It will help provincial authorities, local authorities, real estate owners and housing corporations to make appropriate choices. Should they modernize existing properties to bring them up to current standards or would demolition and replacement be the more cost-effective and sustainable option? Local authorities and other stakeholders will also have valuable information to support district regeneration programmes. Andrew Koster, a senior business development manager at TNO, specializing in Buildings and Infrastructure: “We were unprepared for the property crisis of 2008. We must ensure that we are never taken off guard like that again. ‘Assets on the map’ can make a real difference because its projections are based on a scientific model rather than an extrapolation of incomplete data or intuition.”