According to Savills, there are currently two developments that are affecting the Dutch property market, namely rising inflation and (the fear of) increasing interest rates, exacerbated by the war in Ukraine.
The conflict has caused the price of electricity, gas and industrial raw materials such as refined petroleum products to rise considerably.
These developments are having different impacts on the occupier and the investment market.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “So far, we are only seeing a limited impact of rising inflation and the Russia-Ukraine conflict on the occupier market. Last quarter, we saw an increase in take-up across all sectors, despite strong inflation. This is mainly caused by the Dutch economy, which is still doing well and is expected to continue to grow.”
In Q1 2022, total take-up of retail space was approximately 5% higher, compared to the first quarter of 2021. Logistics (distribution centres) take-up had its strongest first quarter ever with a 30% increase. Limited logistics supply has also caused rental prices to increase. For example, the highest rents for logistics in Q1 2022 in some hotspots are €7.5 per sq m per year higher than during the same period last year; For example in hotspot Tilburg this is an increase from €55 to €62.5.
Even in the offices sector, total take-up has increased by more than 20% compared to the same quarter in 2021. This is mainly the result of a well-functioning economy and more companies who are now taking out new lease agreements again.
The exception to this increase in take-up is the industrial market (manufacturing, production, etc. excluding distribution centres), where take-up was 34% lower compared to the first quarter of 2021. The reasons for this are that take-up in Q1 2021 was exceptionally high and that there is an increasing shortage of industrial space.
The investment volume during the first quarter of 2022 was 27% higher than in the same period of 2021, with €4.1 billion invested in the Dutch property market. In particular, with an increase of 88%, retail volumes were considerably higher than in the same period last year. However, the logistics and residential sectors are still attracting the largest share of investment. This trend mainly began during COVID-19, when these types of properties were regarded as future-proof. Given increasing uncertainty caused by the Russia-Ukraine conflict both could see even more interest.
Jordy Diepeveen, Director Investment at Savills in the Netherlands, says: “We are seeing more competition for the same product. As a result, the sharp rise in interest rates in recent months has not had an effect on the initial yields of 'core' products. Looking ahead, the question will be whether investors can continue to accept the narrowing yield spread in the long term, or whether yields will increase.”
Read the full ‘Market in Minutes – The Netherlands Q1 2022’ here.