Given that the Netherlands entered a new lockdown on 15 December, Covid-19 will continue to dominate the agenda in the short term and affect the economy in the mid term.
However, the focus will most likely revert to pre-Covid-19 issues once a vaccine has been rolled out to the general public in 2021. According to Savills ‘Market in Minutes – The Netherlands Q4 2020’ report, the top four challenges for the Dutch real estate market next year will be:
1) Sustainability and the rise of ESG
Tackling climate change and sustainability is of increasing importance for the real estate sector. 2020 has proven that crises can pave the way for seismic changes. It is therefore essential for investors to rethink ESG strategies and incorporate sustainability into the built environment in 2021 and beyond.
2) Nitrogen policy
As a result of the nitrogen policy implemented by the Dutch government, which limits activities that result in an increase in the deposition of nitrogen in a Natura 2000 area, many new-build projects have been delayed or cancelled. This means that, going forwards, supply will not be able to keep up with rising demand. In the future, this will especially impact the residential and logistics markets and put further pressure on the spatial constraints in the Netherlands.
3) Increase in property transfer tax
As of 1 January 2021, property transfer tax will increase to 8% for all real estate investments in the Netherlands, leading to higher acquisition costs. In the short term, this will make investments particularly into residential properties less attractive. The exact effects on the property market are uncertain, but when looking at previous tax changes, the long term impact on pricing was limited.
4) Brexit
Britain’s departure from the EU has created a climate of economic and political uncertainty. While many companies made and executed their plans years ago, some businesses may still relocate to the Netherlands in the mid or long term, affecting demand for real estate. However, the exact implications are still unclear.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “Although these challenges will create uncertainty and complications while they last, in the long run they will refine established conventions and further strengthen the resilient Dutch real estate market.”
Read the full report here.