A new report from international real estate advisor Savills suggests that record breaking investment volumes in the Dutch commercial real estate market are being driven by strong economic fundamentals, expectations of rental growth and healthy supply.
According to the report 'Netherlands Market in Minutes - October 2017' published by Savills, investment volumes for 2017 are already at €13.1 bn, approaching last year's 12 month total of €13.6 bn.
'Investors see the profit potential of their investments rapidly increasing, resulting in a lot of activity in the market,' said Jan de Quay, Head of Investment at Savills Netherlands. 'Remarkable is the wide diversity of active investors. National private investors, after years of relative silence, have returned to the market, amongst others, because of expanding and broadening banking activities. The fact that this group is active again underlines the fact that the market has fully recovered.'
In the second quarter of 2017 the Dutch economy saw a growth of 3.3%, which has been seen only twice this century. With economic fundamentals expected to remain strong, growth for 2018 is expected to reach 2.5% (source: CPB), outperforming the average Eurozone growth rate of 1.8%.
The report also notes that the Netherlands still offers sufficient supply of interesting investment product. 'Although recent media coverage suggests that supply is drying up, this mainly concerns specific investment categories such as offices at the Amsterdam South Axis. However, less mainstream areas and sectors offer a healthy balance between supply and demand,' it said.
As a result, there remains room for a further yield compression in virtually all sectors. In particular, cities outside of Amsterdam are catching up, with Kennedytoren in Eindhoven recently selling to Encore+ with returns of around 6.5%.
With the percentage of cross-border investment currently at 65%, a record investment volume is expected for the 4th consecutive year.
'We see a lot of movement in the market, in every sense of the word,' concluded Jordy Kleemans, head of research & consultancy at Savills Netherlands.
