‘Race for space’ in the Dutch market due to lack of supply

The “race for space” is set to be the dominant feature in the Dutch real estate market this year and beyond, experts agreed at Real Asset Media’s Global Outlook 2022 – Focus on the Netherlands investment briefing, which was held online this week on the REALX.Global platform.

“In the Netherlands there is a real war for space between logistics, office and residential”, said René Buck, CEO, Buck Consultants International. “It’s a small country, land availability is limited so it’s a battle that will last for several years.”

As opportunities are limited, there is competition between investors and also between sectors.

“The fight for space is quite intense and the question is which sector should have priority”, said Madeline Buijs, chief economist and head of research Netherlands, Colliers. “At the moment residential is being given priority because there is a need for housing, and this is making it difficult for the logistics sector.”

The Dutch government has a commitment to build 100,000 new homes a year, but currently only 65,000 are actually being built.

“The problem is finding the land to build them on and also getting all the necessary permits,” said Buijs. “It’s a long and complex process that can take years and even a decade or more.”

The influx of people into the Randstad will continue, but at the same time many workers and families are moving out of the main Dutch cities to find more affordable accommodation.

“A lot of people are moving to secondary locations partly to have more space, but mostly it’s to do with the huge increase in resi prices”, said Elise van Herwaarden, sustainability manager, ASR real estate.

The supply/demand imbalance is making resi very popular with investors and attracting even more capital to the sector.

Strong appetite for residential and logistics assets

“As a bank we’re very positive on the outlook for the resi sector and we like the social impact aspect as well,” said Dennis de Laat, deputy head, real estate finance Benelux, Berlin Hyp. “We’ve been in the Netherlands for 12 years, we know the market and now we notice a lot of investor appetite, especially for resi and logistics assets.”

Despite the competition with residential, industrial and logistics had a very good year in 2021 but lack of supply is likely to slow its expansion this year.

One of the reasons is that last year supply chain risks pushed companies to increase inventory levels in Europe and fill up their warehouses to make sure their products got to their destination on time.

“Dutch logistics had a great 2021 with take-up at record levels”, said Buck. “This year logistics volumes are likely to be 10% lower, not due to lack of appetite but rather lack of product on the market or lack of space to build new warehouses,” Buck said.

A feature of the sector recently has been the huge growth in mega distribution centres of 40,000 sq m and more to service the market, but that may slow down.

“There may be a levelling off in the next couple of years simply because there are no 100,000 sq m plots to build these XXL assets on,” said Buck. “Again, it’s not about appetite but about supply.”