About Us
International Real Estate situation
Thai Real Estate Situation
Costs of Constructions
Contact Us

2001Real Estate Situation : the Netherlands

Piet J. Korteweg
Department of Applied Geography and Planning
Faculty of Geographical Sciences
Utrecht University

The Dutch real estate markets are at their top now, but recent and ongoing cyclical changes in the economy and supply-factors will contribute to another market situation. The long term structural and spatial changes - growth of the real estate markets and also growth in other parts than the core area of the country - will continue. In this paper some characteristics, the actual situation and the short and long term changes of the office, the industrial and the investment markets are treated.

The office market

The Dutch office market has a size of 38.000.000 m? and is composed of a segment which is owned and used by the same firm (owner-occupier sector) and a segment which is called the 'free market'. The 'free market' in the Netherlands, which is mainly the market for rent-offices where property developers and institutional and private investors are active as principals, has a history of nearly 40 years and now encompasses about 60 % of the total stock of office space and 75 % of the transactions of the total market. The following mostly concerns the free market, the segment where also the valuers are most active.

The demand on the office market is at the top now. In the last years there was a tremendous increase in take up (figure 1), based on the economic growth and especially by the demand of the ICT-sector and business services and despite the fact that the growth of office firms was slowing down in recent years through scarcity on the labor market. The supply of new office space started only very slowly in the last part of the nineties, after a period of oversupply and large vacancies in the first part of the nineties (figure 1). Because of that the property developers were cautious for years in building on risk. They preferred long time to start mainly pre-let projects. In the last few years the growth of the take up of office space was even restricted by the insufficient supply of new office space (1999). The resulting large increases in rents in recent years triggered property developers to start office projects on risk. But in the perspective of the slowing-down of the economic growth and the scaling down of firms in the ICT- and other sectors it will be possible that the delivering up of this office space will in the near future contribute to a crisis on the office market, like in the beginning of the eighties and nineties. Despite the large increases in recent years, even in the prime office locations of Amsterdam and Amsterdam Schiphol Airport the rents are still much lower than in large European cities like London and Paris.

The cyclical development of the office market in the last decades is represented in the patterns of take-up and demand. For the near future a reversal in the market is expected. But on the long term a continuing growth of the size of the Dutch office market is expected, by the continuing change of the structure of the Dutch economy, to a service and especially an knowledge economy. This trend is not only illustrated in the growth of the office stock (40 % from 1989 till 1999), but also in the path of the take-up of office space (figure 1). Besides the cyclical trend of the take-up, on the long run there is a trend of an increase of the levels of take up. Consequent on the continuing change to a service economy for the future a further increase of the demand for office space is expected, but at an decreasing rate of growth, through a diminishing growth of the labor force.

Figure 1 The Dutch office market

Source: Vastgoedmarkt

The Dutch office market is concentrated in the Randstad Holland, the area of the four largest urban agglomerations which is encircling the 'green heart' in the western part of the country. The office markets of these agglomerations have by the composition of their economy a different function in the Dutch office sector and a different size (table 1). The four office markets are still growing, but, by congestion in the Randstad and by autonomous economic development, office development is also taking place in different medium sized cities along the major highways from the Randstad to the south and the east, which are also important connections to the rest of Europe.

Table 1 The largest office markets of the Netherlands

Urban agglomeration Function in Dutch economy Office stock
(m2 lettable floor space)
Maximum rents (Dutch guilders)
Amsterdam International and financial center 5.800.000 800 - 950
The Hague Government center 5.366.000 425
Rotterdam Harbour and industrial activities 3.471.000 425
Utrecht National office center 2.868.000 500

Source: Dynamis

The industrial market

At the industrial market, which has a size of 40.000.000 m2, the segment of the owners-occupiers is about 80 %. The actual trend is that the proportion of the free market, which is mostly a rental market, is increasing by developments at the demand and supply side of the market, to 30 % in five years. More space demanding firms want to invest only in their core activities and they want to be flexible with regard to the adjustment to their space demands. Sale-and-lease-back is an important process at the Dutch property markets. The industrial market has become more attractive to investments and exploitation by real estate investment institutions through the larger demand for standardized space, especially in the form of hybrid industrial buildings, which have a large component of office space. In this regard also the space demand for the growing logistic sector is important.
In the last years the take-up and supply of industrial space is growing (figure 3). The structure of the free industrial market is characterized by large component of older buildings, most of which were transferred from the sector of owner-occupiers. So in the supply of industrial space of the last ten years more than 90 % are existing buildings. While a large part of these buildings don't match with the desires of the industrial and logistic firms, there is actually scarcity on the industrial market. There is to few development of industrial space on risk, also while there is scarcity of terrain for industrial uses. The industrial market is more dispersed over the country than the office market.

Figure 3 The Dutch industrial market

Source: DTZ Zadelhoff

The investment market
The Dutch investment market in commercial real estate was increasing in the last few years. In 2000 8.800 million Dutch guilders was invested in offices, shops and shopping malls and in industrial and mixed real estate by pension funds, insurance companies, quoted property companies and investment companies from other countries. That last category had an proportion of 30 till 45 % in the last years. The proportion of offices in the total of 2000 was 73 %, of industrial real estate 10 % and shops and shopping malls 17 %. In the Dutch investment sector the following developments are going on: enlargement of scale, internationalizing and separation of asset management and property portfolio management. In the mid of the nineties a benchmark of real estate returns was created. On the basis of the work of valuers the returns of investment in real estate of Dutch financial institutions and quoted property companies in the Netherlands are presented (table 2). The property returns were on a high level in the last six years. But the high level of the all property total return in 2000 is based on the increasing return of the residential sector. The returns of the other sectors are decreasing. The changing conditions on the real estate markets have their impact on the yields (table 3). In recent years the yields have been on a low level, but now there is some stabilizing and in the office sector an upwards movement.

Table 2 Total return of property in the Netherlands of Dutch financial institutions and quoted property companies

  1995 1996 1997 1998 1999 2000
Retail 9,0 8,8 10,6 12,6 13,3 12,0
Office 8,6 8,8 11,9 14,4 15,8 15,1
Residential 14,5 14,8 14,2 14,6 18,5 19,5
Industrial 9,8 12,7 12,9 13,6 17,2 13,2
Mixed use 11,4 8,1 10,6 15,6 16,0 18,0
All property 11,9 12,0 12,9 14,2 16,6 16,6
Equities 19,8 40,3 44,9 22,3 30,6 -2,1
Property equities -3,7 30,7 13,6 11,4 10,1 7,1
Bonds 17,2 8,0 6,3 10,6 -1,5 7,6

Source: ROZ/IPD Netherlands property index

Table 3 Yields of commercial real estate in the Netherlands

  1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Offices in Randstad: prime locations
7.00 7.50 7.80 8.25 8.25 8.25 8.25 8.00 7.25 7.00 7.25 7.30
Offices in Randstad: other locations 7.50 8.75 9.25 9.25 9.50 9.50 9.25 9.00 8.25 7.75 8.50 8.50
Offices outside Randstad: prime locations 7.50 8.25 8.50 9.00 9.00 9.50 9.25 9.00 8.25 7.75 8.40 8.50
Offices outside Randstad: other locations 8.25 9.25 9.50 9.50 10.00 10.50 9.75 9.75 9.00 8.50 9.00 9.00
Industrials in Randstad: prime locations 8.25 9.50 9.75 10.25 10.25 10.25 10.00 10.00 9.00 8.50 8.50 8.50
Industrials in Randstad: other locations 9.00 12.00 12.00 12.00 12.00 12.00 11.00 11.00 10.00 9.50 9.25 9.25
Industrials out- side Randstad: prime locations 8.75 11.00 11.25 11.25 11.25 10.25 10.25 10.25 9.50 9.00 9.00 9.00
Industrials out-side Randstad: prime locations 9.75 12,50 12.75 12.75 12.75 12.75 11.50 11.50 10.50 10.00 9.50 9.50
Shops in Randstad: prime locations 7.0 7.75 7.75 8.00 8.25 8.50 8.50 8.50 7.75 7.75 7.25 7.25
Shops in Randstad: other locations 7.50 9.00 9.50 9.50 9.50 9.50 9.50 9.50 8.75 8.50 8.50 8.50
hops outside Randstad: prime locations 7.0 8.50 8.75 9.00 9.00 9.00 8.75 8.75 8.00 8.00 7.25 7.25
Shops outside Randstad: prime locations 8.0 9.50 10.00 10.00 10.00 10.00 10.00 10.00 9.00 8.75 8.50 8.50

Source: DTZ Zadelhoff

The real estate markets in the Netherlands are still in the expansion phase of the property cycle, but the top level is approaching, especially in the office sector. It is expected that the downturn in the office market will be fewer extreme than in the beginning of the nineties, while the property developers were reserved to invest in new buildings without pre-let contracts. For the long term the Dutch office and industrials markets will grow. In the Dutch investment sector the processes of enlargement of scale, internationalizing and separation of asset management and property portfolio management will go on.

@area 5/15, Nonsi Road, Chongnonsi, Yannawa, Bangkok 10120
Tel: 66-2295-3171 Fax: 66-2295-1154 Email: info@thaiappraisal.org  VISIT US: Location Map