The Netherlands has been ‘a star performer’ and will continue being a favoured investment destination, delegates heard at Investment Briefings’ Netherlands & Europe Panel, which was held in Amsterdam last week.
The market is underpinned by a strong economy, said Martin Schellein, Head Investment Management Europe, Union Investment Real Estate: ‘The Dutch economy will continue to outperform Europe and Amsterdam, in particular, is a city with a global reputation and the connectivity and infrastructure to really attract business.’
The office sector is booming, he said, and rental growth is a reality. ‘When we entered the market it was hard to go above €300 m2 but now it has gone up to €400-450 m2 and it will continue to grow because of healthy demand and lack of supply,’ he said. ‘We look forward to more rental growth and we are very positive on this market.’
It has become a very competitive market, said Rogier Bos, Real Estate Finance Benelux, Berlin Hyp: ‘We see more and more international investors coming to the market. Everyone wants to live and work in Amsterdam, but space is limited’. Lack of supply is the biggest concern, he said.
‘We are big fans of Amsterdam,’ said Alexander Fischbaum, Managing Director, AF Advisory Ltd. ‘But it is a competitive market. Real estate is a Dutch hobby, so local investment funds play a big role.’
Financing acquisitions and projects is not an issue, which is positive for the market. ‘If the asset is good from a location and operational point of view there is no problem financing it,’ Fischbaum said. ‘The Dutch banking market has recovered tremendously from its difficult days and international lenders have come back in force.’
Union Investment is concentrating on Amsterdam, Schellein said: ‘We have actually sold out of The Hague and other secondary cities because we didn’t see much value creation, but we continue to buy in Amsterdam, which has been a star performer for us. We would rather buy second-class assets in prime locations than good assets in secondary locations, not for yield but for sustainability of cashflows.’ Union’s latest acquisition just days ago, he said, was in Amsterdam’s historic canal district.
The location is more important than the building, he said: ‘Buildings age more quickly than they used to, so the location has become more important. You can always reposition or restructure or even tear a building down and build a new one, when there is a strong business case for doing so, but you cannot do that in a secondary location.’
For others the quality of the building is more important. ‘We prefer good strong assets in secondary locations, that can give you better yields than in Amsterdam and there is less competition as well,’ said Bos. ‘We like a defensive strategy, assets that would have a future even in a downturn.’
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