Retail in 2nd-tier cities offers best investment in the Netherlands - Savills

Prime retail property in second-tier cities offers the best real estate investment potential in the Netherlands, according to new research published by Savills Investment Management.

The firm said that the overall outlook for the Dutch property market remains positive, with rising consumer demand, limited new supply and the record low cost of borrowing set to result in strong competition for prime assets and continued downward pressure on yields.

'The Netherlands was amongst the best performing Eurozone economies in 2015. Moreover, the underlying economic recovery remains on a stable footing, with both business and consumer confidence rising strongly,' said Irfan Younus, senior research analyst at Savills IM.

Investors seeking to generate income distribution should focus on prime retail pitches in second-tier cities outside Amsterdam rather than chase low yields in the capital, Younus added. 'We also like logistics investments in good urban locations, particularly e-fulfilment and edge-of-city distribution centres, whilst remaining very selective in the office sector given the oversupply of secondary stock.'

With economic growth expected to continue over the next 12 months, real estate stands to benefit from improving occupier markets, limited quality supply and historically low government bond yields.

European real estate markets more generally are set to benefit from their mature status in the face of the emerging markets’ slowdown, monetary policy divergence with the US and increasing political tension in the Middle East.

Kiran Patel, Chief Investment Officer at Savills IM, commented: 'Concerns about a hard landing in China and the pressure on emerging market currencies coupled with geopolitical tensions in the Middle East, are resulting in net capital outflows from these regions into the comparatively liquid European property market, which is seen as a safe haven.'