The Amsterdam Metropolitan Area has long had a dense and well-structured retail network that enables most people to shop daily only a few minutes from home. New technologies and economic developments are altering customer attitudes and demands; people are increasingly shopping online and they are seeking greater convenience and enhanced customer experience. One of the main tasks is to create a better balance in the retail property market by cutting back on the available retail space, while at the same time providing perspective for new and innovative store concepts. In doing so its ensured that shopping areas remain attractive and that retail continues tob e a healthy, innovative an thriving sector. The economic outlook is promising and consumer confidence is growing. There is a relatively high level of transparency, stable demographics, hig profitability and relatively favourable prices.
Why invest in Retail locations?
Transparent and highly developed marketThe Dutch retail market is known for its stable structure that will enable it to continue to grow. The legal framework is sound. Real estate is registered in the publicly
accessible national cadaster. In addition, institutional investors are required to have real estate property valued at least annually by an independent officially registered appraiser.
This makes the Dutch retail property market transparent, which is an advantage for real estate investment.
Stable demographic and prosperous economic context
The population of the Netherlands in growing slowly, but the population of the Amsterdam Metropolitan Area is increasing rapidly. Furthermore, the interest rate of 10 years government bonds is second lowest to that in other countries. Consumer confidence is higher and is likely to remain higher in the Netherlands than in other countries.
Total returns on retail property remained positive during the crisis years. Investments in retail property have performed reasonably well on the
long-term compared to other assets and other real estate classes and this can be expected to continue in future. The return-risk profile of retail property in the Amsterdam Metropolitan Area is attractive. Thus, retail property can play a beneficial role in an investment portfolio.
Steady returns now and in futureAlthough public debate on retail is dominated by the recent retail bankruptcies, overall performance of Dutch retail property stands out in a European perspective. Total return
on retail property is expected to increase as the economy recovers. Investment in retail property is likely to generate a steady income return in in the next five to ten years.
Dutch retail property offers opportunities for diversification and historical performance has shown a stable cash flow and positive long-term capital growth.
Interest of investors and liquidity
The recovery of the retail market was driven by the positive economic outlook and low interest rates. Numerous parties are active in retail property in the Amsterdam Metropolitan Area. Investing in retail property in interesting for foreign investors because of the attractive relative value compared to retail property in other European countries.
Attractive risk premiumAttractive risk premium
The Dutch retail property is now more soundly priced than at the beginning of the crisis. On average, retail rents are at an attractive level, and there is rent growth potential in the market in the coming years. The initial yield on retail property in the Amsterdam Metropolitan Area varies according to type of retail locations. There is a considerable risk premium on Dutch retail property compared to the annual interest rate.
Little growth in retail floor space in future
In the coming three to five years, increase in retail floor space will further decrease while redevelopment of existing floor space will increase. From the investor’s perspective, this trend could contribute to enhancing the future value of retail property in the Netherlands.