Dutch property market


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Report about Netherlands property markets and some mature market trends

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Dutch property market

  1. 1. savills.nl/research 01Market reportDutch property marketsin 2012 and 2013 March 2013Savills World ResearchNetherlandsEconomy: challenging2013, hopes for 2014Over the past two years decreasinghouse prices, increasing unemploy-ment levels and pension funds havingto cut back on pension rights, havecaused a very large drop in consumerconfidence. Since Q4 2011 this figureremained constantly between -30 and-40, while the latest figure of February2013 showed a further drop to -44.This low consumer trust has caused anincrease of household savings and acutback on retail spending.Coupled with a national governmentthat is focusing on budget cuts andnot on economic improvement, thishas turned the Netherlands intoa momentarily stalling economy.An economy which is predicted tocontract by 0.5% in 2013, whilefor 2014 a modest growth of 1% isexpected (CPB). In this period exportsremain the positive economic keyfactor.Investment market:prime remains targetedThe total investment volume in 2012for the office, retail and industrialsectors reached €2.54bn and issignificantly lower than last year’stotal of €3.5bn. The office investmentmarket remained strong with €1.25bntransacted, or 8.8% less than in 2011.The single largest transaction in 2012concerned the €425m sale-and-lease-back transaction of the Philips HighTech Campus in Eindhoven, whiletriple-A office properties did remainthe most important asset class witha total of €450m transacted. All theseprime properties were purchased byGerman investors, among them RealI.S. buying the Alexander building inthe Amsterdam city centre and Dekapurchasing The Rock and the VinolyTower at the Amsterdam South Axis.Both the retail sector (€885bn, or-31%) and the industrial sector(€400bn, or -51%) showedGRAPH 1GDP and consumer spending Falling internal demandhas a negative impact on GDP growthGraph source: CBS-6.0%-5.0%-4.0%-3.0%-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%08Q108Q208Q308Q409Q109Q209Q309Q410Q110Q210Q310Q411Q111Q211Q311Q412Q112Q212Q312Q4GDP Household consumption■ It is becoming increasingly clear where the threatsand also the opportunities lie within the Dutch realestate markets.■ The overall office oversupply is a given factor, butcompanies increasingly focus their attention to lively,mixed-use location in order to provide for a positiveworking environment for their employees. In theseareas demand is high and vacancy low and evendecreasing.■ Office occupier transaction volumes totaled 1.24msq m in 2012, just 5.9% lower than last year. In Q12013 demand remained lower due to the lack of largetransactions. Office investments totaled a solid €1.25bln in 2012, but were supported by the €425m saleof the Philips HTC. Q1 2013 does not include such atransaction but is otherwise in line with Q1 2012.■ Retail has remained attractive for investors overthe past years, showing in decreasing yields for highstreet retail and shopping centres.■ The lack of new retail developments affectedoccupier demand and resulted in a total transactedvolume of 280,000 sq m, much lower than the425,000 sq m of last year and likely also influencedby the economic conditions. Major retailers such asPrimark and Decathlon dominated demand.■ While overall industrial demand was slightly lowerthan last year, demand for logistics increased from0.85m sq m to 1.06m sq m. A stunning 64% of leasedsq m and 66% of the invested volume were recordedin two provinces: Noord-Brabant and Limburg.■ The possibilities for value-add and opportunisticinvestments have increased dramatically overthe past years, with the gap between prime andsecondary ever increasing.SUMMARYAppetite for prime property
  2. 2. March 2013savills.nl/research 02Market report | Netherlandssignificant drops in total investmentvolume. While overall liquidityproblems play an important role inthis, it is also the scarcity of goodquality investment product and thelack of new developments that setslimitations.Investments in Q1 2013 so far (all dataup till the second week of March) total€130m so far for the office market.The purchases of the TomTom HQfor €30.8m and the IJdock offices for€19.0m being the largest transactions.Both properties are located inAmsterdam and both were bought byGerman investors, HIH Global Investand Union respectively. At first glancethis volume is way lower than the€545m invested in the same periodlast year, but in that specific period thePhilips High Tech Campus was boughtfor €425m. When discarding that singletransaction the overall volumes arevery comparable.Retail investments so far in Q1 2013reached around €200m and are threetimes higher than those of the sameperiod last year. The volume includesthe transfer of 50% of the shares ofthe Home Trade Centre in Nieuwegeinfrom TCN to CBRE GI. Next to that,seven small to medium-large shoppingcentres have been purchased in thisperiod, varying from the local 2,700sq m SC ‘t Schoot in Eindhovento the newly built 12,000 sq m SCOosterheem in Zoetermeer.The industrial investment volumetotalled around €50m so far in Q12013, slightly higher than the €40m inthe same period last year. The volumeis very much dominated by the saleof some very large industrial/logisticproperties, all (semi-)distressed andpurchased for less than €300 per sq m.Office occupier marketDespite the economic headwind totaloffice occupier transaction volumereached 1.24m sq m in 2012, beingjust 5.9% lower than the 2011 volume.Even in these challenging timesoccupiers remain on the lookout for abetter location for their employees. Inmost of these decisions companiesmove towards well-functioning mixed-use locations. This is well visible inAmsterdam where 70% of the 2012occupier volume landed in either thecity centre, the South Axis or the corearea of Amsterdam Southeast, allattractive locations, with relative lowvacancy levels. At the mono-functional,often peripheral office locationsvacancy rates are rising and vacantoffices are increasingly being taken offthe market and transformed to otheruses, like the conversion of the 28,000sq m The Dam office at the Sloterdijkoffice location into a hotel.With high and potentially risingvacancy the office market has turnedinto an occupier market. Occupiershave strong negotiating positionsand only those areas and offices thatprovide for a specific quality have beenable to keep rents at a stable level.The three largest leasing transactionsin the Netherlands in Q1 2013 so fartook place in Amsterdam: DAS (15,300sq m; Southeast), Leaseweb (6,700 sqm; Southeast) and Booking.com (6.250sq m; centre). This very much fits intothe consolidation and concentrationtrend described in the box on page 3of this report. The overall volume ofleasing transactions up till mid March2013 reached 165,000 sq m, whichis considerably lower than that of thesame period in 2012, especially due tothe lack of large-scale transactions.Retail occupier marketThe economic climate does have asignificant effect on the retail sector.With households keeping their handson their purses, retailers on averagehave to compromise with lowerturnovers. Especially, when takinginto account that an increasing partof the sales can be attributed toe-commerce, or internet shopping,totalling around €10bn in 2012 (+10%).On a qualitative level this does forcestores, chains, shopping centres andeven city centres to reconsider theirposition within the retail market andto identify and enhance their strongqualities, all this in order to remaincompetitive.Retail occupier demand reached280,000 sq m in 2012, significantlylower than the 425,000 sq m in2011. This has much to do withthe economic outlook, but is also areflection of the limited number of newretail developments brought to themarket.Interesting exception to the traditionalcity centre focus of Dutch retail is thenew to develop Sugar City factoryoutlet centre (FOC) to be realizedin 2014/2015 in Halfweg, just westof Amsterdam. This brings the totalnumber of FOC’s in the country to four.GRAPH 2Occupier transaction volume Office transactionsstanding their groundGraph source: Savills0500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0002007 2008 2009 2010 2011 2012Offices Industrial Retail“Location quality is the no. 1 decisivefactor. Mixed-use office locations,logistic hotspots and high street retail areprofiting.” Jeroen Jansen, Netherlands Research
  3. 3. March 2013savills.nl/research 03Market report | NetherlandsA second FOC project, just to the northof Rotterdam, was voted down.The first months of 2013 lacked newleases by volume driven retailers suchas Decathlon and Primark, resulting indemand reaching a total of 35,000 sqm and is about half of last year’s total.Industrial occupiermarketThe total industrial occupiertransaction volume of 2012 reached2.4m sq m, very much due to a strongfourth quarter and was just 8.7%lower than last years turnover. Takingthe economic situation into acocuntthis decrease is actually less thananticipated.Like in other market segments thenumber of new developments hasdwindled. The projects that docontinue are almost exclusivelybuilt-to-suit developments and this isespecially so in the logistic market.While the overall industrial demandsuffered a decline, the logistic sectoractually showed improved figures.Take-up reached 1.06m sq m,compared to 850,000 sq m in 2011.Demand is very much focused towardsthe South of the Netherlands and astunning 64% of all logistic occupierdemand is located in the provincesof Noord-Brabant and Limburg, withTilburg, Venlo and Venray being themost dominant cities.Compared to surrounding countriesthe Netherlands very much profitsfrom having two main ports (Schipholand Rotterdam), an excellenttransport and logistics infrastructure,a competitive tax regime and aprofessional and stable financial andbusiness infrastructure. As a result anumber of new european distributioncentres (EDCs) were realised in theNetherlands in 2012. Examples aresoftware company Microsoft movingits EDC from Germany to Venray andelectric car manufacturer Tesla whichwill realise its new EDC in Tilburg.Besides the usual purchasers, likeWDP, DHG and Prologis/AMB, in2012 a number of properties werepurchased by relatively newcomers,such as Delin Capital and Aspen,indicating they also see the potentialof well-located, long-leased, logisticproperty in the Netherlands. Theoverall logistic investment volumereached €285m, lower than previousyears, and listed just one portfolio sale,that of Belgian logistic investor WDPpurchasing the 150,000 sq m Lakesidelogistic portfolio for €105m.The total industrial leasing volume inQ1 2013 so far reached 390,000 sqm, of which 160,000 sq m regardedlogistic property. This volume isvery much in line with last year’sdemand and shows that, even in thischallenging economy, industrial andlogistic companies are proactivelyoptimizing their location portfolios. Forinstance by setting up EDC’s in theNetherlands, such as OMS (30,000sq m in Oosterhout) and ModusLink(17,000 sq m in Venray).GRAPH 3Investment volume per sector Office investmentsstable, industrial and retail show declineGraph source: Savills05001,0001,5002,0002,5003,0003,5004,0004,5005,0002007 2008 2009 2010 2011 2012Offices Industrial RetailGRAPH 4Prime gross yields by sector Stableyields in all sectorsGraph source: Savills2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%2004 2005 2006 2007 2008 2009 2010 2011 2012 13 Q1Office Retail LogisticsConcentration and consolidation are key elementswhen describing the Dutch office market.■ First of all there is a concentration of inhabitantsand employment at national level. While the numberof jobs rose by 5.7% in the four largest cities of theNetherlands, it decreased by 1.0% in the rest ofthe country (source: Lisa). Similarly, the number ofinhabitants in the central and western part of theNetherlands is forecasted to grow, while the outskirtsof the country will see a drop in number of inhabitantsand sometimes even in households (source: PBL).■ Secondly, companies are consolidating thenumber of locations at which they operate. Therecent consolidation of five Amsterdam ING officesto a single location in Amsterdam-Southeast is anexcellent example.■ The third type of concentration is that towardsthe best performing areas. In Amsterdam in 2012around 70% of all new office occupier leases tookplace in just three areas: city centre, South Axisand Southeast. These are all mixed-use areas withexcellent accessibility by public transport and thesetwo factors combined are clearly of the highestimportance in today’s office location decisions.■ The final type of concentration concerns the smartworking trend in which employees regularly workfrom home and where desk sharing is key. In somecases, like CapGemin in Utrecht, a 40% cut in sqm usage has been realised. Own research showsthat the majority of companies is eyeing this trendand incorporation will potentially lead to a 15-20%cutback on office space needed in the next 5 years.Office market focusConcentration & consolidation
  4. 4. March 2013savills.nl/research 04Market report | NetherlandsSavills teamPlease contact us for further informationSavills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a companythat leads rather than follows, and now has over 500 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus,agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential lossarising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.Clive PritchardInvestments+31 (0) 20 301 2000c. pritchard@savills.nlTABLE 1Largest occupier transactions 2012EDCs, consolidation and retail chainsTable source: SavillsTABLE 2Largest investment transactions 2012Philips HTC largest transactionTable source: SavillsOUTLOOK 2013More investments, stable occupier demand■ In 2013 the volume of office occupier transactions is expected to remainsimilar to that of 2012. The number of new developments does not changemuch and the office occupier market remains characterized by outsourcing,smart working, consolidation, concentration and demand for flexibility.This will drive companies to optimise their housing needs. Well functioningoffice locations will profit from these trends, whiile the transaction volumein secondary areas will be subdued. Rents and vacancy levels at primelocations will remain stable, while in the remainder of the market vacancy islikely to increase further and rents will continue their downward trend.■ Appetite from especially the German funds for prime office propertyremains strong, while interest from value add and opportunistic buyersis rising due to the increasing gap between prime and secondary assets.Coupled with an increase in (semi-)forced sales will likely lead to anincreasing number of office investments in 2013. The total volume ishowever expected to turn out similar to that of 2012, since that volume washeavily supported by the €425m Philips High Tech Center transaction.■ Occupier demand in the industrial and logistic market is likely toanticipate the projected economic recovery. A slight increase in demand in2013 is therefore expected, followed by a larger increase in 2014. Rents athotspots will remain stable and could increase slightly, due to local scarcityof high quality property. Older supply however, has to compete on pricein order to remain marketable. investment levels are likely to increase to atleast €0.5bn since more and more investors enter this market segment.■ Retailers will in 2013 again be confronted with decreasing consumerspending, growing competition from e-commerce and limited newdevelopments. This will lead to occupier demand levels similar to thatof 2012. Investors increasingly focus on their core strategy (Redevcoand Vastned on prime high street; Corio and Unibail-Rodamco on largeshopping centers) and supply of non-core properties is likely to increase.This will lead to increased investment levels to around €1bn in 2013.Address Sq m City SectorRhenus 52,000 Son LogisticsVan Rooijen 45,000 Eindhoven LogisticsBrand Loyalty 41,650 Venlo LogisticsING Bank 18,850 Amsterdam OfficeRobeco 16,200 Rotterdam OfficeStibbe 14,400 Amsterdam OfficePrimark 7,350 Eindhoven RetailDecathlon 5,900 Best RetailPrimark 5,775 The Hague RetailObject/city Price (mln) Buyer SectorLakeside portf. € 105.0 WDP LogisticsEkkersrijt € 35.0 Dokvast LogisticsBarneveld € 25.7 WDP LogisticsPhilips HTC € 425.0 Chalet Groep OfficeVinoly € 140.0 Deka Immob. OfficeThe Rock € 132.9 Deka Immob. OfficeThe Wall € 91.0 The Wall R.E. RetailSC Waddinxvn € 60.0 Altera RetailSingel Adam € 57.3 ASR RetailJan de QuayInvestments+31 (0) 20 301 2000j.dequay@savills.nlJeroen JansenResearch+31 (0) 20 301 2094j.jansen@savills.nlCoen de LangeAgency+31 (0) 20 301 2000c.delange@savills.nl