Brighter prospects for Dutch real estate as growth returns

Prospects for the Dutch real estate market are brighter after two difficult years, delegates heard at Real Asset Media’s Global Outlook 2022 – Focus on the Netherlands investment briefing, which was held online yesterday on the REALX.Global platform.

“The outlook for 2022 is positive and the economic context is favourable,” said Madeline Buijs, chief economist and head of research Netherlands, Colliers.

Economic growth has returned: GDP increased by 3% in 2021, despite a dip in the last quarter due to the December lockdown. Growth is expected to be at the same level this year, while the unemployment rate is at a record low of 3.7%.

Investment volumes are set to increase again after a steep fall to €14 billion in 2021 from the €20 billion recorded in 2020.

“The main reason for this is the decline in investment in the residential sector,” said Buijs. “2020 was a big year for resi, but last year volumes almost halved, partly because the transfer tax increased from 2% to 8%.”

Retail investment also declined because of the negative outlook for the sector, compounded by the increase in online shopping during the pandemic.

Many stores closed down after the lockdowns, especially in inner city locations where vacancies are highest, but there are pockets of resilience with local shops and some out-of-town locations doing well.

The office market has held up quite well, considering the challenges the sector faced as people had to work from home for months.

“We’ve seen a very slight decline in investment volumes in offices, but there was a pick up in the second half of the year, with two major deals being announced in the sector in Amsterdam and Eindhoven,” she said.

In December ABN Amro sold its global head office in Amsterdam to Victory Group for €765 million, while in October GIC, Singapore’s sovereign wealth fund, bought the High Tech Campus in Eindhoven, home to 235 companies, for $1.3 billion.

Sentiment is positive and the uptick in late 2021 could be sustained this year as the pandemic recedes and people return to the office.

“There was a decline last year, but for very specific reasons, including lack of supply which remains a problem,” said Buijs.

Investor demand is not a problem, but there are four main issues ahead for the real estate sector that market players should be aware of.

“One issue is government regulations that will affect mainly the resi and logistics sector,” she said. “Inflation is also a huge topic as costs increase. Bankruptcies are expected to increase following the end of government support. The fourth problem is labour shortages, that are very widespread and are affecting the real estate market as well.”