New research from Savills suggests the Dutch real estate investment market is over the worst of the downturn, with transaction volumes increasing by 17.7% year-on-year in the first half of 2024.
Savills attributes the recovery to stabilised interest rates and growing confidence in the occupier market, with investment volumes reaching €5.3 bn.
The retail (+74% year-on-year) and hotel sectors (+101%) saw particularly strong growth, indicating renewed investor confidence following the Covid-19 pandemic, high inflation, and a drop in consumer confidence.
However, while the overall market is recovering, the number of large deals exceeding €50 mln has decreased to 32% of the total, down from at least 40%, suggesting a shift in investor strategy.
Raymond Frederiks, market intelligence analyst at Savills in the Netherlands, commented: ‘The volatility in the real estate investment market and the ongoing discrepancies in price expectations between buyers and sellers led to a wait-and-see attitude over the past six months among institutional investors following a core-strategy. On the contrary, for some investors seeking smaller investment volumes, this is an opportune moment to focus on assets offering reversionary rental potential or residential properties with the possibility to sell off individual units. This allows for these investors to benefit from relatively low purchase prices.’
The office sector is experiencing a surge in demand, with take-up increasing by 16.2% since the second half of 2023 and a substantial 44.5% since the first half of the same year. Despite economic pressures, companies are showing a growing appetite for office space.
In contrast, the industrial and logistics sector is facing headwinds due to a weakened economic climate, impacting imports, exports, and industrial production. While still recording a 9.8% increase in take-up compared to the first half of 2023, this growth is notably lower than the previous six-month period.
Savills is optimistic about the Dutch real estate market's trajectory, anticipating increased occupier and investor demand in the second half of 2024 and into 2025. However, it cautions that the recovery will be uneven across different sectors.
While knowledge-intensive industries are expected to face challenges due to potential immigration restrictions, the overall market is poised for growth. Persistent mismatches in buyer and seller expectations could hinder progress, but potential interest rate cuts by the ECB could reinvigorate investor confidence.
