NL returning to normal but ‘living’ markets under pressure

Although the turmoil in the Netherlands real estate markets is subsiding somewhat, with people returning to offices and the logistics sector providing some rental growth, in the living sectors demographics are driving demand and increasing regulations and growing construction cost are major headwinds.

“We need more resi in a very small country with limited space to build, so this causes scarcity,” said Bas Wilberts, head of residential and hotel investments, Netherlands, Savills.

“Better spatial zoning in the Netherlands could help solve these issues,” Wilberts told Real Asset Insight’s Richard Betts.

In particular, sudent housing, starter homes and space for seniors are in short supply. But Wilberts said that private capital is buying up many assets with the object of privatising them.

“Price levels are close to 75% of vacant possession value,” he said. At that price level you have some margin to upgrade your properties for ESG, while improving the quality of kitchens and bathrooms, in order to sell them off to private individuals. That strategy that has been actively pursued by many private investors for decades onwards, but it has become more relevant and regulation is forcing them to do this.”