OUTLOOK NETHERLANDS Perception of Dutch retail market 'at odds with reality'

The Dutch retail property investment market, which suffered considerably in the downturn following the crisis, is picking up but ‘the perception of the market is at odds with the reality’, according to Erik Langens, executive director of capital markets at CBRE in the Netherlands.

Speaking at PropertyEU's Netherlands Outlook Briefing which was held in Amsterdam in early December, Langens said economic tailwinds would likely give the retail market, which is already showing signs of recovery, a further boost in the coming months.

‘GDP is growing, consumer confidence is coming back quite rapidly and with it consumer spending,’ he said. Retail sales in the Netherlands were up 2% in the third quarter compared with the year-earlier period, the biggest quarterly rise in seven years, according to official statistics. ‘The gap between prices for retail assets versus offices is enormous and that combination will cause the retail market to flourish next year,’ Langens predicted.

He noted that the retail market typically lags around 2-2.5 years behind the office sector. 'On the transactions we are seeing at the moment, sellers are realising yields north of 8-9% for prime assets. The long-term average is around 6.5% so the gap between the long-term average and where we are now is still very big but I think it will narrow in the next year.'

Retail trends
In terms of the trends that are set to shape retail real estate, the challenge of formatting shopping centres to deal with an online society will be a continuing theme everywhere, said Herman Kok, international research director at European mall developer Multi Corporation. ‘That will mean facilitating retailers with online platform opportunities, click & collect schemes and other tools,’ he noted. ‘But the real estate is not yet ready for that so investors in retail property will have to take that into account.’

At the same time, while physical objects can be traded online, emotion and experience cannot, he noted, providing opportunities for the bricks-and-mortar side of the business. ‘Shopping centres are changing from places to shop and buy to places to meet and places to consume,’ he said. A particular growth area is the move towards an increased food & beverage offering, which is set to rise to 30% from 8-10% at present.

He cited the redevelopment of Gelderlandplein shopping centre in Amsterdam, which will become more of a community centre with an enhanced F&B component, as a Dutch case in point. ‘The task we all face is how to make retail places relevant to the future.’