The Dutch property market displayed mixed dynamics in the third quarter of 2024. According to the latest Market in Minutes report from Savills, there were significant shifts in both the commercial occupier and investment markets in the Netherlands.
The European Central Bank (ECB)’s deposit interest rates dropped for the third time in 36 days in Q3 2024, and now stands at 3.25%. This reduction provides some relief to property investors, who have long been grappling with the impact of significantly rising interest rates.
Occupier take-up in the industrial, logistics, office, and retail sectors decreased in Q3 2024 compared to the same quarter last year. The industrial and logistics sectors experienced declines of 15.56% and 14.82%, respectively. A sluggish economy, combined with a more critical approach from occupiers regarding the location and quality of the properties they occupy, resulted in reduced demand. High-quality properties in strategic locations, such as the logistics hotspots in the southern Netherlands, remained highly sought after.
The office market recorded a 36% year-on-year decline in take-up. This trend can be attributed to the challenging economic conditions. Looking at take-up, retail emerged as the most stable sector in the past quarter, with the smallest decline in take-up (6%) compared to the same quarter in 2023. Nevertheless, the number of bankruptcies is steadily rising, with Blokker being the most prominent example. The total number of bankruptcies in 2024, currently at 110, is nearing the 10-year average of 141 prior to the Covid-19 pandemic.
Savills reports a notable rise in Dutch investment volumes. In Q3 2024, figures surged by as much as 30% year-on-year, nearing the total investment volume of 2023. However, major core strategy-based transactions remained largely absent. The interest from large institutional investors in real estate continued to be limited, as demonstrated by considerably longer fundraising periods. The average time required to close new funds rose from 13 months in 2020 to 22 months in 2024.
Bas Wilberts, Head of Investment at Savills in the Netherlands, says: “The significant growth in investment volumes has been largely influenced by the sale of 60% of ERES REIT’s total Dutch residential portfolio for approximately €760 million (representing nearly 30% of the Q3 total). Although volumes increased in the third quarter, they remain 34% lower than the previous 10-year average, indicating a still-sluggish investment market. The improved financing outlook will take some time to further incentivise property investors. We see value-add and core plus strategies continuing to dominate the current market and expect this trend to continue in Q4 2024. In the residential investment market, we are increasingly seeing a transition from long-term operation to unit sales, with private investors and family offices leading as the most active buyers.”
Read the full report here.