The high street will continue to dominate the Dutch retail scene as the country becomes even more urban-centred in the next few decades, advisory firm ECORYS has told delegates at Expo Real.
The Netherlands' population will grow by around 6% by 2030, but 75% of that growth will occur in the 27 towns and cities with more than 100,000 inhabitants. In a country which already has one city centre location per 40,000 inhabitants, this will lead to an even greater concentration of retail space in urban areas.
Wilbert Kroesen, market researcher with ECORYS, said other forms of retail had struggled for a number of reasons. Attempts to build French-style hypermarkets and multi-storey shopping malls did not prove popular with Dutch customers, while out-of-town retail parks are still mainly limited to furniture and DIY stores.
Government regulation has also restricted opportunities for diversification, Kroesen noted: 'It's very difficult to realise new retail in the Netherlands'.
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Presenting ECORYS's report, Investment in Retail Property in the Netherlands, Kroesen said the demographic trends indicated a polarisation over the next 15 years, as major urban centres and smaller cities with large catchment areas grow at the expense of more rural locations. Currently around 40% of floor space is in inner cities while 30% is dispersed.
The advantage for investors is that the Dutch retail sector is a solid destination providing steady returns, Kroesen said. Total returns have held firm at around 6.8% and have never been negative since the 2008 crisis. Initial yields are becoming stronger in better locations, though the largest city centres are still experiencing compression.
The development pipeline has been cooling off, with the total volume decreasing rapidly since 2008. The share of redevelopment has grown from 10% in 2008 to more than 40% in 2015.
Kroesen said the shift towards redevelopment was likely to continue in the immediate term, as the high street continues to be the most attractive location for investors. 'We think there is a strong polarisation between strong retail locations and weaker retail locations,' he said. 'The risk premium is very attractive in the high streets in the larger cities because there are big opportunities to improve retail property and there is enough interest from foreign fashion retailers.'
