The skyline of Amsterdam will change significantly by the end of 2022: Union Investment is building a new development with two high-rise buildings on the north bank of the river IJ. The Y-Towers include a hotel and congress tower (Martim Hotel, on the right) and the residential tower (to the left).
Team V Architecture, a visualisation by Zwartlicht (Simulation)

Growth spurt for Amsterdam

Union Investment is developing a €460 million mixed-use project directly opposite Amsterdam’s central railway station on the north bank of the IJ River, which will be anchored by a new Maritim Congress Hotel – set to become the city’s second-largest conference venue. The Y-Towers project will transform the skyline of the Overhoeks district in Amsterdam North, until recently a rundown industrial area cut off from the 17th-century historical centre by the river. By Judi Seebus

Union Investment has a long tradition of forward funding real estate projects and urban district developments with the potential to regenerate urban areas and create buzzing new hotspots. With compelling core investment opportunities becoming increasingly scarce in Europe, it was a natural next step to create a separate value-add team to capitalise on the depth of the company’s financing resources and capabilities in seeking projects further up the risk/return spectrum against the background of the low-yield market environment. The Union Investment value-add team was created in in late 2018 and is headed by Monika Gerdes, formerly Head of Asset Management Europe III. The Y-Towers is the team’s first project and was acquired from the original developer at the end of 2019, following a dispute with the general contractor that halted construction at the site.


“The Y-Towers is also Union Investment’s maiden development in the Netherlands and the first time we are embarking on such a large and complex project of this kind in more than a decade,” Gerdes said. “Apart from the inner-city waterside location, what makes Y-Towers special is the opportunity it gives us to carry out a hotel development project of this size and create a residential tower within the liberalised rental market sector.” 


European housing and value-add are interesting new investment fields for our open-ended property funds.
Volker Noack , Member of the Management Board at Union Investment Real Este GmbH

Solution-oriented talks

By mid-2018 the City of Amsterdam was close to taking the leaseholds back from the sellers. “At that point Union Investment was approached by project participants who believed the company had the skills and expertise to take the project forward,” explained Gerdes. “We have been active for more than a decade as a real estate investor in the Netherlands, particularly in the office and hotel sectors, and are known for our commitment and long track record of investing in urban districts and revitalisation projects. During a four-month due diligence period which started in May 2019, we set about securing agreements from the authorities in line with our own internal guidelines, for example regarding changes to provisions in the leaseholds to secure title. Under the agreement we finally reached, we were obligated to keep the main tenant, Maritim, and accept many terms of the contract, particularly concerning implementation of the project,” Gerdes said. Upon completion, the Y Towers project will rank among the top five largest assets in Union Investment’s global portfolio and will be added to its €12.9 billion UniImmo: Europa fund (project cost €460 million).


The company currently holds a portfolio of ten commercial properties in Amsterdam valued at about €940 million as well as assets in Eindhoven, Enschede and Rotterdam. Construction of Amsterdam’s new iconic development recommenced in January this year and the complex will feature two towers covering a gross floor area of some 106,000 square meters including the Maritim-branded conference hotel, which will be the tallest building in this area of the city at a height of 110 metres with 33 floors and 579 rooms. Adjacent to this, a residential tower will rise to a slightly lower level of 101 metres with a total of 174 apartments, as well as an extended-stay hotel with 120 serviced apartments.


The Y Towers form the final piece of what has, in recent years, become a prime location on the Overhoeks waterfront of Amsterdam North, reached by ferry directly behind the Central Station and offering spectacular views of the 17th-century canal belt.


Magnifier

Historic location

For centuries Amsterdam turned its back on the area on the opposite bank of the river, which was where convicted murderers were hanged on the gallows until 1795. Rembrandt is known to have made a boat excursion to the gallows field, as evidenced by his ink drawing of Elsje Christiaens, a young Danish maid who was convicted of murdering her landlady with an axe in Amsterdam in 1664. Her lifeless body is portrayed by the Dutch master hanging on the gibbet in the gallows along with the instrument of her crime.


On the whole, however, respectable citizens in Rembrandt’s era avoided the northern district and this did not really change until the construction of the North Sea Canal in 1876, which connected Amsterdam with the open sea. In the following decades, a new shipyard sprang up and in the course of the 20th century other companies active in cables, machinery and petrochemicals followed suit, turning the area into a thriving industrial location until sometime in the 1980s.


The district underwent yet another metamorphosis at the start of the millennium with the revival of some of the neglected factories and it was definitively embraced by the city and its residents in 2012 with the opening of the EYE Film Museum, a striking eye-shaped architectural icon at the water’s edge. Behind the museum, luxury apartment blocks are now arising across Overhoeks to create a multi-layered urban skyline alongside A’DAM, the former Shell research centre, as well as the new Y Towers.


Union Investment is no stranger to Amsterdam’s rapidly evolving hotel market and already owns three hotels including Radisson Blu, Crowne Plaza and Motel One, located in the south and centre of the city. While all three hotels also cater to the city’s convention market, the Y Towers complex will become a destination in itself for conference goers, creating a new rival to the RAI convention centre in the south of the city and other hotels targeting this segment like the Okura and Novotel.


Industry analysts say there is still ample space in Amsterdam’s market for a dedicated conference hotel, thanks to its growing popularity as an events destination. In 2018, the Dutch capital ranked sixth in Europe, according to figures from the International Congress and Convention Association (ICCA), and it scores particularly well in the areas of medical science, technology and science generally, the three most popular international association meeting topics. Tourism and business travellers are an important economic driver for Amsterdam and the steadily increasing number of annual visitors is expected to total 29 million by 2025.


The Maritim Congress Centre will add much-needed space to Amsterdam’s undersupplied conference and convention market, according to the German hotel group’s owner and supervisory board chair Dr. Monika Gommolla. “We see enormous potential in Amsterdam, particularly in the conference business. Maritim has more than 50 years’ experience in this field and  Maritim Hotels always stand out from the crowd with their excellent locations. There are lots of opportunities for development at this location, which is central, modern and has excellent infrastructure.”


In line with the strong growth in tourism, the number of hotel rooms in Amsterdam has risen by more than 25 percent in the past five years and in areas surrounding the city centre the increase has been as much as 40 percent. At the same time, rising visitor numbers have put pressure on the city’s facilities, leading to vocal complaints from residents and prompting the municipality to develop a new policy in 2017 to encourage visitors to stay in less popular  areas within and outside Amsterdam. New hotel developments in the city centre have been halted altogether.


Bas Wilberts, Director of Investments at real estate agent Savills’ Amsterdam office, described Y Towers as an excellent example of the municipality’s strategy to spread visitors more widely across the city. “Amsterdam has a lot of advantages over other cities as a conference location thanks to its excellent transport connections, the close proximity of its international airport and relatively low costs. But some conference organisers have avoided the city because of the limited supply of convention facilities and the lack of hotel accommodation. I think the development of the Y Towers will open new doors and attract new groups of visitors.”


Monika Gerdes heads the Value-Add team at Union Investment Real Estate GmbH. Her full attention is currently focused on the Y-Towers project development in Amsterdam North. The opposite bank of the IJ with the Eye Film Museum (left) and the A'dam Tower (right) will noticeably develop further with the 33-storey Maritim Congress Hotel and a second high-rise for 174 apartments.
Peter Strelitski

Ferries will connect Y Towers with other hotels

Union Investment’s Monika Gerdes also expects Y Towers to relieve visitor congestion in other areas of Amsterdam by attracting people and businesses to the Overhoeks district. “The largest conference room at the Y Towers will offer space for 2,000 people, which is equal in size to the biggest facility at the RAI (Amsterdam’s largest convention centre). In total, the Y Towers congress and conference centre will have the capacity to host 4,000 people. The Maritim Hotel will be able to accommodate a significant number of delegates, but not all, and we are now in talks with other hotels, particularly those located near Amsterdam’s Central Station and others in the harbour area on the other side of the IJ River. These international chains are very interested in cooperating with us and ideas have already been floated to create a new transport infrastructure via private boats and ferries with direct connections to the Y Towers for conference visitors,” she said.


In addition to the hotel, the project’s residential tower – with floor area totaling some 16,000 square meters and serviced apartments on the lower floors – is targeting the upper segment of the rental market with apartments and exclusive penthouses on the top levels. Gerdes added that there is strong demand for this type of high-quality accommodation in Amsterdam, from both local Dutch residents and expats and no real competition in the area from similar developments.


Union Investment sees mixed-use buildings not only as a means of diversifying risk, but as a model of sustainability in themselves, she added. “We have a strong focus on sustainability to make the complex as green as possible to meet the demands of the City of Amsterdam, our tenants and our own fund. The energy performance certification (EPC) guidelines for Amsterdam are already very tough, but we are now also taking measures to obtain at least the BREEAM Excellent certificate and are looking to see how to anticipate potentially more stringent regulation in the future.”


Union Investment also aims to make value-added acquisitions in the dynamic housing market, as Volker Noack, Member of the Management Board at Union Investment Real Estate GmbH, explains: “We are interested in adding residential schemes to all our open-ended funds as there is strong demand for product and rents are rising by double-digit figures. Our commitment to the Y Towers project has already sparked interest from other players, mainly in the Dutch market but also elsewhere, who recognise our strong focus on quality and skills in development and forward funding. But it will be difficult to find another development of this size and quality."


By Birgitt Wüst


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