Following another record year for the Dutch office investment market, property consultant Savills said it expects the market to remain stable in 2008. According to Savills' research, the prime office market has achieved positive rental growth (12.3% year-on-year in Q3), and combined with new developments, this has fuelled another record year for investment, with volumes matching the EUR 4.5 bn transacted in 2006.
Following another record year for the Dutch office investment market, property consultant Savills said it expects the market to remain stable in 2008. According to Savills' research, the prime office market has achieved positive rental growth (12.3% year-on-year in Q3), and combined with new developments, this has fuelled another record year for investment, with volumes matching the EUR 4.5 bn transacted in 2006.
The market has experienced stability in prime net yields at 90-165 basis points (bps) higher than in London and Paris, and 40-60 bps higher than in Stockholm, Frankfurt, Milan and Madrid. These higher yields are attributed to a limited turnover in assets due to a shortage of stock, which has resulted in foreign investors buying into developments.
In the secondary markets, traditional equity buyers have been more successful recently due to lack of competition from highly geared London based funds since the summer. Finance has been provided by Dutch institutions such as Rabobank (FGH, Bouwfonds) ING, Fortis and SNS. These Dutch banks are willing to lend to equity-based clients.
Clive Pritchard, director of Savills, said: 'The outlook for the primary market is positive due to lower risk, persisting demand, growing economy, stable interest rates and low vacancy. We would advise investors to stick to the basic property fundamentals of well let investments with strong covenants and long term growth.'
The majority of Dutch office stock is owned by Dutch and German institutions, with long term hold strategies, and provides steady annual returns year-on-year, averaging 8%.
