The economic growth exceeded our expectations in the Netherlands this year. So did the number of new jobs that were created so far. Consumer confidence is constantly on a high level and interest rates are still pretty low. As a result there is an increasing demand for homes in the Netherlands. Not only in the larger fast growing areas, but also in more remote parts of our country. The number of homes sold continues to rise and is not limited to just the so-called overheated cities like Amsterdam and Utrecht. There is still a growing demand for new build projects and there are signs that the construction industry lacks the capability to cope with this situation. Capacity is not rising fast enough to meet the demand.
The number of vacancies in the rental sector are at an all-time low and prices are rising. There is a great demand for homes in the mid-priced rental sector. Both the central and local government are proposing policies to increase the number of new build homes in this field. There are of course discussions on affordability, especially in city centres in the west of the Netherlands.
Both Dutch and foreign investors did indeed increase their investments in residential portfolios. The sum of investments in Dutch real estate was on a very high level last year, but also in the first part of this year.
In recent years we discussed vacancy rates in office space. Presently there are signs of shortage of office space and not only in areas like the Zuidas in Amsterdam. Vacancy rates have plummeted as a result of the growing demand. But also due to the successful conversion of a substantial volume of outdated office buildings into housing, hotels, etc. Initial yields are still on a reasonable level in the Netherlands, but they have definitely compressed. This process will continue the next year.
Brexit did not affect the Dutch economy so far and headquarters of financial institutes have not moved to the Netherlands at a very large scale as was to be expected. There is still a lot going on in the Dutch retail business. New department store chains stepped in to replace the bankruptcy of some famous old department store brands. On the one hand we see an ongoing increase in consumer spending. On the other hand, the influence of Ecommerce is still growing rapidly.
The industrial market remains strong. Due to the increasing spendings in Ecommerce the demand in modern warehousing rocketed. This year investment volumes are on a very high level. And it is to be expected that this process will continue the next year.
2017 is an exceptionally sound year for those active in the real estate business. We are, as always, looking forward to discuss opportunities with you.
Wienke Bodewes – Chairman of the Board of Holland Property Plaza
CEO of Amvest