According to Savills latest research report ‘The Netherlands Market in Minutes - Q3 2020’, investors have increasingly shifted their focus to core investment products since the outbreak of COVID-19 as part of their flight-to-quality and safety strategy. As a result, residential properties, logistics and prime offices amounted to approximately 75% of the total investment volume in H1 2020.
The 2020 investment year got off to an exceptionally strong start, + 12% compared to Q1 2019. Nevertheless, the total transaction levels for H1 2020 have dropped compared to H1 2019 as a result of delayed investor decisions. Savills notes that investment activity picked up in recent months following subdued market activity in early Q2. Several transactions that had been restarted after lockdown were completed, including the sale of Strawinskylaan 10 by Deka Immobilien to Aviva Investors for €85 million. Despite these transactions, H1 investment volumes failed to reach the record levels of the last three years. With over €7 billion invested, the volume was similar to 2016, 11% higher than the 10-year average.
The return of investor interest at the end of Q2 occurred for a number of reasons. Firstly, there is still plenty of capital available. According to Savills analysis, institutional investors across the globe had made over €200 billion available to buy real estate in 2020. Currently almost 40% of this amount is yet to be allocated. Secondly, the Netherlands is high on the list for investors searching for investments with a limited risk profile, even more so during the Corona pandemic.
Jan de Quay, head of investments at Savills in the Netherlands, says: “Clearly, COVID-19 is having an impact on the Dutch investment market. However, in the long term, COVID-19 is unlikely to cause any major shifts with regards to real estate. Experience and analysis of previous global recessions shows a considerable initial impact but the long-term effect on real estate is often more limited than initially thought, given the ‘static’ nature of the sector.”