In mid-2019, the supply shortfall in the number of homes built over the past 10 years in the Netherlands, relative to demand, stood at 265,000 according to ABF Research, as the number of building permits issued in recent years has failed to reach the government’s annual target of 75,000.
In the first quarter of 2019, a decline of 25% was registered compared with the same period last year. That was the lowest level in three years.
The Dutch office investment market may have been overshadowed by the residential sector in 2018, but investor appetite for offices remains strong, thanks to the successful transformation of outdated supply and robust fundamentals in specific local markets. After a long absence, there is room again for new office developments in Amsterdam, in particular in the still evolving Zuidas business district, which commands the highest rents in the country.
Marleen Bosma, Head of Research & Strategic Advisory at Bouwinvest, said:
“The residential sector is growing in importance due largely to the rising number of households and the huge demand for affordable and more differentiated housing.”
Generally speaking, the Netherlands remains largely a replacement market for offices, but some locations like Amsterdam’s Zuidas and cities such as Utrecht, Rotterdam and The Hague are exceptions. As rents continue to rise in most prime locations against a backdrop of tightening supply, some well-placed secondary markets like Hoofddorp and Amstelveen are benefitting from their proximity to Amsterdam and their relatively low rental levels.
While the Dutch office market has returned to health, the retail market is now undergoing a massive transformation due to the integration of online and offline, new formats which are replacing old ones and demographic changes.
Marleen Bosma added:
“The retail sector has taken over the baton from the office sector as investors convert vacant spaces to other uses to adapt to changing demand. Transformation of outdated retail space is expected to gather pace in coming years as the number of stores at B and C locations across the Netherlands continue to contract in the wake of retailer closures and consolidation of national and international chains. The retail transformation process will take time, but ultimately it will make the Dutch retail landscape more compact and futureproof and create new investment opportunities along the way.”