#Provadare Fears of Dutch retail oversupply creates opportunities for 'canny' buyers

Concerns about oversupply in the Dutch retail sector are creating opportunities for ‘canny’ investors, claims a study by Amsterdam-based investment manager Bouwinvest.

‘There are fears that investors in Dutch retail property are going to repeat the past mistakes in the office market, which earned the moniker of "European office graveyard due to its high vacancy rates,’ said Bouwinvest head of research Robert Koot.

Bouwinvest released the study on the second day of the Provada real estate fair in Amsterdam.

‘But these concerns are keeping retail yields relatively high – for example on average around 7% net for neighbourhood shopping centres.’

Koot argued that the trend was creating opportunities for investors to buy up retail assets that are insulated against oversupply, particularly smaller ‘convenience’ properties in urban centres such as Amsterdam, Rotterdam, The Hague and Utrecht.

During the financial crisis convenience grocery retail assets proved more resilient to the downswing in the market than non-food stores outside core prime shopping districts, the report points out.

The fears about supply levels have been driven by a rise in the volume of empty retail space in the Netherlands, which rose to 7% of the total market at the start of 2015. At the same time the volume of planned new retail space amounts to as much as 3 million m2, or around 10% of the existing stock.

Bouwinvest says the ‘worrying disconnect’ between the market’s fundamentals and the signals being received by investors and developers was keeping risk premiums for quality assets artificially high.

‘This is creating mispricing opportunities for canny investors able to step into those types of “convenience” assets in the main urban centres that are dominant in their own locations and so “future-proofed” against an overall surge in supply,’ said Koot. ‘Now is actually a great time to step into the right niches in Dutch retail.’