CBRE: “Real estate investment in the Netherlands is slowing down”

The Dutch real estate market is extremely vital. However, a lack of buildings suitable for investment restricts further growth of the investment market. These are the results of the recent CBRE Mid-Year Outlook.

In the first half of 2019, the total investment volume amounted to € 8.3 billion, a 24% decrease compared to the same period last year. Fewer properties were put on the market, affecting all segments except the residential and healthcare real estate markets. In the housing market, the investment volume was boosted by the Heimstaden transaction, which involved a € 1.4 billion residential portfolio purchase from Round Hill.

Banks are funding less real estate

Another explanation for fewer investments is that major Dutch banks are providing smaller loans for real estate than before. As a result, finding funding has become more challenging, particularly for investments outside the high-end segment.

2019 not a record-setting year

Highlights per sector

Offices

The office market is healthy. In terms of structural vacancy, various old offices have been renovated and completely transformed. In addition to increasing rental volumes, this has led to low vacancy rates in most cities. The rise in new developments has been slow. In the short term, this means that rents will continue to rise. Amsterdam stands out from other cities with the lowest vacancy rate, highest take-up volume and highest rents. Comparable trends can however also be seen in the other G4 cities and the major cities outside the Randstad area, such as Eindhoven, Den Bosch and Amersfoort.

Housing market

There is a persistent housing shortage in the major and medium-sized cities, where local (municipal) regulations have an impact on the housing market. New build transactions are delayed due to regulations, lead times for permits and rising construction costs.

Retail market

The growth of e-commerce and changing consumer behaviour have led to an excess of retail floor area. By 2023, some 25% of all retail floor area will be obsolete. There are specific opportunities for investors and retailers. For a more in-depth analysis of the Dutch retail market, please see CBRE’s "Resetting Retail’.

Logistics

The vacancy rate for logistics space is at a historic low (3.5%). There is significant demand for distribution centres in centrally-located logistics hubs. The high number of new-build developments has not yet resulted in higher vacancy rates, but it has slowed rent increases. Occupiers are aware of their bargaining power in negotiations with developers and investors, which affects any rent increases.

Healthcare real estate

We are expecting another record-setting year for healthcare real estate. The market is benefiting from demographic trends and changing regulations. Healthcare providers are focusing on their core activities and are selling real estate or outsourcing real estate activities. This creates an even more open market. For an in-depth analysis of the Dutch healthcare real estate market, click here.

Full report

The full CBRE Mid-Year Outlook report can be downloaded here. The developments are in line with CBRE’s previous forecasts for the Dutch real estate market as outlined in our annual Real Estate Outlook report.