Dutch Market Needs Political Stability To Woo Global Investors

For Amsterdam to compete for global capital, the Netherlands needs more political stability and to ease regulatory burdens to encourage more investment, according to some of the country’s biggest investors.

With retail, residential, logistics and prime offices all showing strong potential and Amsterdam retaining its position as a key investment location, finding a clear political position going forwards is increasingly critical. 

“Historically, the Netherlands has been very transparent and investor-friendly, but that’s where we’re getting concerned in the short term, especially looking at regulatory changes," APG Head of European Property Investments Robert-Jan Foortse said.

He was speaking at Bisnow’s Netherlands State of the Market, the inaugural event in the Dutch capital, held at WTC Amsterdam.

"It used to be very stable but is not stable anymore, though the longer term is still constructive."

The Dutch market saw the biggest jump of any major country when it came to deal volumes in Q3, with the market up 54% at €3.3B, data from MSCI showed. Year to date, the market is up 6%, with €8B transacted, driven primarily by deals in the rented residential sector. 

Foortse said APG continues to see opportunities in the country, which has very positive economic fundamentals. 

“When we look at the Netherlands in terms of liquidity, it’s quite liquid but not that deep, so we also assess economic growth and the ability for us to remain for the long term. And the market has low unemployment, the fundamentals also good, so it all bodes well on that global scale,” Foortse said.

But for overseas investors to really embrace the country again, political stability is key, the event heard.

“The election situation and difficulty forming a coalition means it is tough to create a clear policy," CBRE Netherlands Managing Director Erik Langens warned.

"If we see a move to the left, there will be more regulation and input from government. If we go to the right, it’s very difficult to see how they compromise. We need leadership for the market.” 

Despite the complicated political backdrop, Langens said the market remained active across sectors, highlighting that larger-scale retail is seeing more demand again. He said CBRE is working on a large portfolio, which is likely to close in the first quarter.

“From a global context, it is clear market confidence is picking up for all markets. From a house perspective, for the first time in a decade, EMEA has the most favourable investment outlook compared with APAC and the U.S.,” CBRE IM President EMEA Real Estate Division Rik Eertink said.

“Like many platforms, we have made sector bets in the last cycle, especially around beds and sheds. What we are seeing is that the gap between sectors is narrowing, and therefore, we believe now in looking at skilled operators and sweating assets,” he added.

Politically, he anticipates that international capital would prioritise residential and sustainability and stressed that the Dutch real estate industry needs to play its part in creating the stability that institutional capital prefers.

“We have a pan-European asset holding of €7B to €8B assets under management, but it’s very focused, with more than 70% invested in London, Paris, two German cities and Amsterdam," Eertink said. "We believe that these are where there is the most value to gain. If you’re able to get your hands on absolute prime, you have the opportunity to make the most out of it — it’s less about yield shift, all abut net operating income growth."

Pointing to the residential sector, Foortse speculated that a million new homes could be required, which would need €350B to €400B in capital. He warned that while there was a strong opportunity for foreign capital and private equity to buy existing assets, this would not create new homes and could simply see overseas investment make good returns and then exit.

“Traditionally, we came from a risk angle and tried to maximise returns. This time, the return is sort of given and we need to minimise the risks from development – planning, construction, leasing,” he said. “Planning can take up to 10 years. We can’t afford that.”

Beyond offices and residential, AEW Country Head, The Netherlands Frederique Weber said the company would continue to double down on logistics, while it would target offices selectively, from a value add angle and ESG component.

“We have a large allocation in logistics in the Netherlands, but, looking back, it was more on a yield play. Looking ahead, it’s way more about energy and connectivity infrastructure," she said.

“On our own platform, we are focusing on energy performance, solar panels, battery storage, EV charging stations. In the end, if you can create an asset that can produce, store and share the energy, then those products will have a premium.”

She also believes there is the potential to reconvert non-prime offices, insisting that investors and developers need to be more creative and stay close to municipalities to repurpose older buildings.