A long-term strategy that looks beyond today’s challenges will work well in the Dutch market, delegates heard at GARBE’s Investment Briefing – the Netherlands: Real Estate Outlook 2023, which took place recently on Real Asset Media’s REALX.Global platform.
“As an active asset manager with our own development company we can find opportunities in the current market, taking over companies or taking over asset management mandates,” said Michiel Dubois, managing director, GARBE Institutional Capital.
The other focus for the group is value-add development, he said, in the belief that it will deliver more value for our investors.
“We’re active managers with a long-term strategy and we build to hold”, said Maurits Smit, managing director Netherlands, GARBE Industrial Real Estate. “We intend to use the development opportunities that are arising in the current market”.
GARBE also does spec developments, despite the fact that spec financing is very hard to get in the Netherlands.
“Banks are not interested, so you have to turn to debt providers and it’s expensive,” said Smit. “But we’re convinced that the increase in rents will compensate.”
This belief in the logistics sector’s prospects is the reason why the group is continuing to invest for the long term.
“We’ve started many developments which will be completed when the current slowdown will have passed,” said Dubois.
Economic conditions are challenging in the Netherlands: GDP growth of 4.5% is higher than the European average (3.2%), but expected to slow down in 2023. In the meantime inflation has reached 12%, much higher than the 9.2% EU average. Rapidly increasing costs are having an impact on activity in the market.
“We’re seeing less transactions, and rising construction costs and interest rates mean that not everyone will be around next year,” said Dubois. “But the stronger developers will sit it out and survive.”
The market has not come to a standstill, but many investors are taking a wait and see attitude, in the expectation that prices will come down. As the saying goes, said Dubois, sellers want yesterday’s price and buyers want to tomorrow’s price.
“It’s not a pause but a slowdown, as we’re still seeing core deals being done,” said Smit. “But the pricing has changed in the last few weeks and we see more opportunistic capital coming in.”