Retail set to be flavour of year in Dutch market for 2015

Retail is set to be the sector of choice in the Dutch market this year as investors take advantage of increased consumer confidence and attractively priced assets, PropertyEU’s Netherlands Investment Briefing at the Provada fair heard on Wednesday.

Following a resurgence of interest in office and residential property in the last two years, investors are now turning to the retail sector, according to Bart Verhelst, executive director of CBRE in the Netherlands and a member of the panel. ‘The retail sector is set to bounce back this year. Consumer confidence is up and people are spending again,’ he said, adding that Dutch GDP growth is forecast to come out at between 1.5% and 1.7% this year.

Verhelst noted that a number of retail portfolios are expected to trade in the Dutch market this year, including assets held by Italian insurer Generali which form part of a broader portfolio valued at €275 mln. The rebound in the retail sector would apply to all sectors he said, from shoppng centres to high-street and out-of-town retail.

Fellow panelist Jaap van der Bijl, managing director of investor relations at asset manager Syntrus Achmea, pointed to a ‘sudden change’ in attitude towards retail, describing it as a ‘perfect play’ with investors looking at both the core and opportunistic side of the spectrum. He singled out smaller convenience centres in urban hubs - essential neighbourhood grocery stores - as an attractive segment where yields of 7% can be achieved.

Van der Bijl noted that the strong interest in the Dutch market among foreign investors – who accounted for two-thirds of the €10 bn in transaction volumes last year – was set to continue for the next two to three years. ‘There’s an influx of capital as investors continue to look for yield.’

Residential market
The surge of interest in the residential sector in particular – which saw a number of major social housing portfolios fall into foreign hands last year – followed government moves to deregulate the market and open it up to cross-border capital.

Dick van Hal, CEO of Bouwinvest, told the panel that new investors seeking to enter the housing market – especially the private rental segment – had missed the boat on existing stock, leaving time-consuming development in tandem with a local partner as the only other option. ‘Residential is a development market,’ he said. ‘You have to wait a couple of years before you can invest and many foreign investors want to invest directly rather than wait.’ He noted that Bouwinvest’s pension fund clients were long-term investors who were prepared to take the long view.

‘Residential is a complicated market for foreign investors but it remains a core play,’ agreed Van der Bijl. According to CBRE’s Verhelst, the strong foreign interest in residential property is set to continue despite much-heard claims of scarcity of product. Foreign investors like Patrizia – which landed a €578 mln housing portfolio last year in the biggest-ever Dutch residential deal – were turning to forward-funding structures as a way of sourcing new product, he noted.