Some €2.8 bn of office stock is hanging over the Dutch real estate investment market as the recovery in occupier demand gathers pace, according to Savills.
Some €2.8 bn of office stock is hanging over the Dutch real estate investment market as the recovery in occupier demand gathers pace, according to Savills.
The property adviser has identified close to 20 office portfolios in the €40-plus mln price range that are currently on the market. 'And before the summer three large single assets will be sold, totalling another €350 mln,' Savills said in its latest Market in Minutes report on the Netherlands.
While investment volumes slowed to €1.7 bn for the first four months of 2015 from €2.1 bn in the same period last year, Clive Pritchard, head of investment at in the Netherlands, believes there is plenty of investor demand for the wave of office portfolios on offer and investment volumes are due for a 'growth spurt'. Savills forecasts the 2015 volume with surpass the €9.5 bn recorded last year.
There are several reasons for this contention - the supply of large portfolios and individual assets for sale has picked up after a dip at the start of the year; the European and Dutch economies are growing and the recovering in occupier demand in the Netherlands is gaining further traction as a result.
Portfolios
Norbert Jansen, head of research at Savills Netherlands, notes that the Dutch market is now back on track for another 'portfolio year' after a lack of this sort of product in the first four months. Looking at January to end-April, retail and residential investments were both 30% lower than last year. In contrast office investment volumes were also identical and investment in industrial real estate was up almost 12%.
For the rest of the year big retail and logistics tickets are to come on the market alongside the €2.8 bn of office portfolios.
Savills is launching the marketing of the 160,000 m2 De Rotterdam mixed-use scheme in the port city of Rotterdam after the summer. This will likely be the largest single-asset transaction ever in the Netherlands.
The residential market is the only laggard as the supply of massive portfolios, which caused investment in the sector to peak at €2.8 bn last year, have dried up. However, Dutch investors Amvest, Vesteda, Syntrus Achmea and Bouwinvest have executed some residential acquisitions this year, and some more mid-sized transaction are expected to follow.
A further €1-2 bn in property-related loans are also on the market to tap into demand from private equity investors.
Broad-based growth
The Dutch economy grew by 2.4% year-on-year in the first quarter of 2015, compared to 0.4% for the Eurozone as a whole. In addition, unemployment in the Netherlands continued its downward trend from 7.2% to 7% in Q1 2015, and house prices increased by 2.3% year-on-year in April 2015.
The steadily improving economic picture has lead to a pick-up in occupier demand. Driven by the industrial market, commercial take-up was up 31% to 1.45 million m2 in the first four months of 2015. Office take-up totalled 340,000 m2 in the first four months, up 14% on the 295,000 m2 recorded in the same period last year.
The same trend is being repeated across the Dutch real estate sector. 'After seven meagre years, occupier demand is now rising in all sectors,' said Wouter Stevens, Netherlands agency at Savills.
Yields
Prime gross yields in the office market stand at 5.6%, in the logistics market at 6.6%, for high-street retail at 3.9% and shopping centres at 5.6% and in the residential market at 4.9%.
Savills expects gross prime yields in all sectors will harden by another 10-20 bps in the remainder of 2015.