Dutch property markets hover just above par in Q1

Annualized total returns for the Dutch real estate market over the 12 months to end of the first quarter 2009 came to 0.5%, down from 2.8% in the previous quarter, according to the ROZ/IPD Netherlands Quarterly Property Index.

The annualised total return reflects negative capital growth, at -4.3%, and income return, steady at 5.0%. Among the main sectors, Retail produced the only positive quarterly total return, at 0.5%, followed by Residential, at -0.5%, while Offices were -0.6%.

For the second consecutive quarter all sectors saw falls in capital values. However, the extent varied somewhat with negative growth most pronounced in Offices, at -2.3%, followed by Residential and Retail at -1.5% and -1.0%, respectively. Quarterly income returns rose by 10 basis points to 1.3%, due to further deterioration in capital growth while income held steady. Also at sector level, Offices produced a first ever negative annualised total return, at -1.8%. In previous quarters the sector’s returns have been held above water by robust income returns.

Aart Hordijk, director at ROZ, said: 'This is the first quarter in which a 'fully fledged' Quarterly Index has been published, made possible by the increased participation ratio of contributing property funds - up from 67% in Q4 2008 to 76% in Q1 2009. This increased transparency for the Netherlands comes at a crucial time for European property markets.'

He added: 'The trend - which began in the fourth quarter of last year - continues into 2009; that is increasing yields, as a result of higher perceived market risk causing deterioration in capital values. Furthermore, rental growth in the Dutch property market has come to a halt, which will limit the future income stream attainable from expiring leases due for re-negotiation. Overall, however, the capital growth declines are not as sharp as those seen in the UK and Ireland.'