Real estate investment volumes in the Netherlands were considerably lower in 2021Q1 (-66.8% compared to 2020Q1), similar to other European countries such as Belgium (-87.9% 2020Q1) and Germany (-47.24% compared to 2020Q1), according to the latest 'Market in Minutes - The Netherlands' report by Savills.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, explains: “The Netherlands had a slow start to the year both for take-up and investment volumes. However, all economic signals in the Dutch economy indicate a recovery during 2021. For example, there has been a sharp rise in business confidence and an increase in the number of companies registered. Within the real estate sector, this is reflected in continued interest in logistics real estate and supermarkets. Sectors that were hit harder during the pandemic, such as offices, appear to be picking up, for example there has been an increase in requests for flexible office space.”
In the first three months of 2021, the number of search requests for flexible office space was 44% higher than in the same pre-COVID period in 2020, according to Workthere. This is a strong indicator of recovery because the figures are showing an ‘early cyclical’ response. After a solid 2020, 2021 has also started well for the logistics sector: 76% of the total real estate take-up volume in 2021 YTD was logistics.
Jan de Quay, Head of Investment at Savills in the Netherlands, says: “International and domestic investors are noticing the recovery of the office market. Overall, Dutch real estate is seen as a safe haven. The strong risk profile that characterises it can be seen in the initial yields achieved.”
The sharpest deal in a well-performing logistics market took place in Tilburg at a GIY of 3.5%. Beyond the hotspots there was further yield compression, for example in Almere (4.24%). Prime office yields are also compressing while the number of transactions strongly declined. The retail real estate market mainly shows yield compression for supermarkets. Within a year, the prime GIY dropped from around 6% to below 5%.
Jordy Kleemans concludes: “Due to investors’ continuing search for so-called ‘safe havens’, the growing ‘wall of capital’ will be partially invested in Dutch real estate, which we expect will lead to an investment volume of around €15 billion in 2021.”
Read the full report here.