Despite relatively good forecasts, 2021 started off slow with a total investment volume of €1.7 billion, compared to a long-term average of €4.1 billion.
This is due to the end-of-year sprint made by investors during the last quarter of 2020, but also due to the increase of the transfer tax.
Due to uncertainties in the user market and the limited supply, the limited number of investment transactions in the office market was almost exclusively aimed at core product in the city centre of Amsterdam and the Zuidas business district. More and more investors are starting logistics portfolios to profit from this growing market. The new entrants to the market mainly focus on core product in hotspots and developments outside of hotspots are mainly purchased by established names. The investments in the retail market are mainly focused on supermarkets, considering the strong user market foundations.
Overall, Dutch real estate markets are seen as safe havens. The strong risk profile that characterises Dutch real estate sectors is shown in the initial yields achieved.
The sharpest deal in a well-performing logistics market took place in Tilburg at a GIY of 3.5%. Outside of the hotspots a yield compression is visible, for example in Almere (4.24%). A yield compression is also visible in the office market, where the number of transactions strongly declined. The retail real estate market mainly shows yield compression in the market for supermarkets. Within a year, the prime GIY dropped from around 6% to below 5%.
2021 had a slow start both for take-up and investment volumes.
All economic signals indicate that a change will occur in the course of 2021, including continued interest in logistics real estate and supermarkets. Sectors that were hit harder, such as the office market, appear to be picking up, as shown from the recovery of the early-cyclical trend: the requests for flexible office space.
Now that the economy is recovering and business confidence is being restored, businesses will feel more comfortable taking the step towards signing new leases. In addition, the growing number of companies means a quantitative growth in the number of users.
Although the investment volume in the Netherlands turned out considerably lower in 2021Q1 (-66.8% compared to 2020Q1), this market’s performance was relatively average compared to other European countries such as Belgium (-87.9% 2020Q1) and Germany (-47.24% compared to 2020Q1). Due to the endless search of investors for so-called ‘safe havens’, the growing ‘wall of money’ will be partially invested in Dutch real estate, which will lead to an expected investment volume of around €15 billion in 2021.
Sources Savills Research, CBS, Rabobank, NVM/ Brainbay
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