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DWS: Dutch real estate market continues to perform well

Published on 10-03-2020
Despite the economic slowdown, the Dutch real estate market continues to perform well. Asset manager DWS states this in its first "Real Estate Outlook" this year for the Netherlands and all of Europe. Rotterdam offers well-priced prime locations, and despite the sky-high prices in Amsterdam, DWS is still overweight in the capital. Cities such as The Hague and Utrecht also offer interesting investment opportunities, according to the asset manager.

According to the most recent INREV figures, funds targeted at the Netherlands achieved a total return of almost 11% last year. Although this percentage is lower than in previous years, it remains well above the European average.

Dutch market is leading the way
The Netherlands experienced a consistent growth of 2.3% per year on average between 2015 and 2019. Nevertheless, the Netherlands is not immune to global economic developments due to its open, trade-oriented market. Growth is expected to decline to 1.3% over the next two years. With an expected growth of 2%, Amsterdam is ahead of the national average over the next two years. This is mainly due to the rising rents and the limited supply in relation to demand.
Shortage requires active management
Due to the scarcity on the European real estate market, active investing is the best choice, certainly with regard to top locations such as Amsterdam, according to DWS, where Amsterdam is one of the top choices for active management.

Especially A-locations around the capital with good facilities and a good connection to the city will benefit from this. Cities such as The Hague, Utrecht and Rotterdam can also benefit from these push and pull factors. DWS is also overweight on the business market in Rotterdam.

The Dutch retail sector is performing less well. For example, DWS believes that rents in the sector will decrease by 5% -6% in the coming period. As liquidity dries up, a significant outflow of yields is taken into account. With this in mind, DWS predicts that primary values ​​will fall by 25%, an even greater decline is expected for secondary and tertiary retail centers.

Popular residential property
Investors continue to flock to Dutch residential real estate. 2019 saw an increase of no less than 7% on an annual basis, which at € 7.2 billion is well above the historical average. The sector continues to benefit from the strong population growth around the Randstad, a mismatch between supply and demand, and continuous market liberalization.

DWS prefers more affordable residential cities. This is due to a slight yield premium, a stable income throughout the cycle and better resilience to changing regulations.
Source: Vastgoedjournaal, 6 maart door de Redactie