Resi in demand in the Dutch market but tax issues loom

Residential continues to be in demand in the Dutch market, experts told Real Asset Media’s recent Netherlands investment briefing.

The demand is across the spectrum, from affordable housing all the way to exclusive country homes. The pandemic trend for “staycations” has made second homes more popular.

“The luxury end of the market is growing very fast,” said Koen Colvoort, general director, Julia. “Investors are seeing the opportunity and putting money into high-end holiday homes with an emphasis on luxury and wellness.”

Suburban homes are also sought-after, as many people moved out of Amsterdam during the pandemic to live in greener and quieter surroundings.

“Resi prices have shot up in the Eastern and Northern parts of the city because demand increased so much,” said Colvoort.

More resi-to-office conversions to satisfy demand

The demand for homes has also led more investors to convert old office buildings into residential accommodation.

“What we see is that families are moving east and north in Amsterdam, while young people like to live in the Metropole and we’re very busy creating new homes for them,” said Onno Adriaansens, co-chair European real estate group, lead real estate desk the Netherlands, RSM. “It’s a very positive trend that stops entire city areas from being dead and dark at night.”

Logistics and residential are in great demand, but most investors prefer to deploy capital in different sectors.

“Nine out of ten of our biggest clients are diversifying,” said Sander Verseput, co-founder, Chainels. “They buy resi but also offices and logistics to be better prepared for the future. The favoured strategy is creating mixed-use areas, adding residential to convenience shopping and offices.”

Experts’ expectation is that the Dutch market will continue to attract investors in 2022 as fundamentals remain strong. But many are still not aware of the increase in the real estate transfer tax rate for the acquisition of non-residential real estate, which went up from 6% to 8% on 1 January 2021.

“We see that many investors are not taking into account the tax increase in their financial modelling, but they should,” said Adriaansens. “Another not very well known fact is that the transfer tax for residential properties is still at 2%, but only if the asset is for personal use.”

Another change that came about this year is that the lower 2% rate no longer applies to all residential assets. If the buyer will not actually live in the property as a main residence, if it is a holiday home or a buy-to-let property, then the higher rate of 8% will be applicable.