Investors were risk averse when purchasing offices in Amsterdam last year and are now becoming more cautious. The effects of this are reflected in the city’s office investment volumes which decreased from €2 billion in 2019 to €1.4 billion in 2020. €97 million has been invested in Amsterdam offices so far this year.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “Interest in core product remains high – a trend that is visible across the board. Investors are battling for ‘core’ assets, keeping these yields stable at around 3% or putting them under further pressure. At the same time, there have been almost no transactions for secondary offices and pricing is lower than before the pandemic.”
Reinier Wegman, Head of Sales at Savills in the Netherlands, says: “The impact of Covid-19 on the role of offices is seen as a risk to future demand for office space by some investors. Once this risk can be calculated in better, they will focus on value-add and opportunistic opportunities again.”
In addition to the impact of Covid-19 on the Amsterdam office market, the Savills report looks at another, more long-term trend: Environmental, Social & Governance (ESG) strategies.
Jordy Diepeveen, Head of Acquisiton at Savills in the Netherlands, explains: “Investors are increasingly compelled to anticipate transition risks in which changing laws and regulations can potentially have a negative impact on real estate portfolios. Additionally, and partly due to more far-reaching legislation in the field of sustainability, investors have become more aware of the physical risks to their real estate portfolios, for example as a result of climate change.
“As well as mitigating these risks, many real estate investors are increasingly eager to make positive contributions to the United Nations’ sustainable development goals (SDGs). They are outlining the risks and their ideas for contributing to the SDGs in ESG (Environmental, Social, Governance) strategies. These ESG strategies will increasingly determine investment choices in the Amsterdam office market. Given that 11% of Amsterdam offices currently have an energy label D or worse, accelerating sustainability efforts and continuing to selectively add sustainable offices is therefore necessary to enable Amsterdam to maintain its current competitive position in the wider market."
Read the full report here: https://insight.savills.nl/savills-city-specials/