This brief review of the Dutch property market focuses chiefly on the highly developed Randstad region in the provinces of Utrecht and North and South Holland.
The Office Market
The Netherlands has three million offices workers and 65% of office accommodation is in the randstad region with 50% of that level in just the main cities. Considering the country’s level of development there is an impressive amount of new office development being carried out at places at Amsterdam’s South Axis and the city’s Science Park and in the ‘New centre’ at the Hague. Edge of town locations are popular for office developments because of the difficulties of using (and parking) private cars in many historic city centres. The trend for businesses to rent rather than own their premises is well developed.
According to Savill’s report(pdf) last Autumn, the Dutch office market improved from 2005 to 2006 with the level of vacancies falling from 13% to 11.5%. Office prices have improved slightly but rentals have remained stable. However, the consequent drop in rental yields was not expected to continue. The key characteristic of the market is the demand for new, high quality offices and the comparative glut of older office buildings.
According to the RICS the positive trend has continued into 2007 although not as strongly as in France or Germany . The role played by property investors in the office market is particularly important and here, foreign investors, especially German and British, have been active for the last decade or so.
The Retail and Industrial Markets
The trend away from owner occupation in the office sector is not mirrored in Dutch industrial concerns where specialised plant requirements have meant that these businesses tend to own their premises. Premises for logistical/distribution purposes are particularly important part of the industrial property market and this category of property is more attractive to outside investors than manufacturing facilities.
The retail property sector has mushroomed over the last 30 years. Latest trends are for a slight decline in city centre retail outlets as out-of-town developments become more popular. The Dutch retail industry is increasingly dominated by retail chains and the role of foreign players is also increasing. Even in the centre of the main cities retail space is considerably cheaper than in London or Paris and secondary shopping centres are subject to downward pressures on retail property prices.
The Residential Market
When it comes to accommodation there is an important distinction to be made between Amsterdam and other cities in the Randstad, such as the Hague and Utrecht. Although Amsterdam as a whole has the most expensive ‘to-buy’ market, it is mid-priced accommodation in the central area (ie. 650,000 to 800,000 euros) that shows the best yields. In the other cities it is the lower end of the market where the best yields are to be had. However, the residential rental market is seriously affected by government regulations with the result that the open market really only exists at the upper end of the price range where larger, modern accommodation owned by institutional investors is popular among affluent/elderly tenants.
According to the RICS 2006 European housing survey(pdf), Dutch house prices rose in 2006 by about 5% on average with the best growth occurring away from the main centres. The Dutch mortgage market is characterised by very high (over 100%) LTVs and in the light of mortgage market problems in the US, it doesn’t seem beyond the realms of probability that funds for mortgages in the Netherlands will shrink in the short term. Owner occupation has been on the increase in the last 15 years despite high VAT on construction and high property transfer taxes.