Why international investors are re-examining the Dutch market
After some years in the doldrums, the Netherlands real estate market is at last showing signs of strengthening as prices pick up, foreign investors show increasing interest and agent sales start to grow again.
The Netherlands is seldom seen as a leading player in the global overseas property sector, but, in fact, its commercial sector in 2013 and 2014 had the largest percentage of foreign buyers in Europe. From 2004-2012, the Dutch commercial property market saw 70% of sales from domestic investors, but in 2013 and 2014, there was a dramatic turnaround as foreign investors made up 66% of total investment, according to ABN AMRO figures.
The residential real estate market recovery in the Netherlands has been slow, but it is gaining steam, with property prices expected to rise by 2% above inflation this year and reach more than 4% by 2017, according to recent figures from De Nederlandsche Bank. Ratings agency, Moody’s, is even more optimistic and believes that the Dutch market is set for “robust” growth and that house prices could rise by up to 5% in 2015.
In fact, the latest figures from May show prices of owner-occupied houses, excluding new construction, on average rose 2.6% year-on-year in May 2015. House prices have shown annual rises each month for more than a year, data from Statistics Netherlands and the Land Registry Office shows.
International property advisor, Alto Vista International describes the market as a ‘solid investment’, a description the Dutch would likely welcome after the years of decline. “Now as the Dutch economy continues to strengthen and confidence increases, property in the Netherlands is again making headlines as a solid investment. With historically low interest rates and house prices expected to rise in 2015, independent lenders believe now is the time to invest in Dutch property.”
Erik Steinmaier, Head of Real Estate Advisory at ABN AMRO points out that overseas buyers bring real benefits. “Foreign investors add value to the existing real estate market by reducing vacancy levels and by renovating property. And last but not least, they are contributing to the transformation of the Dutch housing market by buying up homes from housing associations.
“Dialogue with foreign investors can result in opportunities for cooperation: Dutch players possess valuable knowledge which is vital to the foreign partners to operate successfully in this market. And foreign players, with their considerable financial clout, can help Dutch partners realise their growth ambitions.”
The increase in property demand means that agents are at last starting to sell more property. In the first quarter of 2015, NVM brokers sold 28,900 homes, up 19% on the previous year, although down 6,000 on the last three months of 2014.
It has also provided a boost to membership of the Dutch Association of Estate Agents (NVM) which has now welcomed its 4,000th member for the first time since November 2011. The honour went to Susan Otten, an agent from Van Ditshuizen Brokerage, in Meppel. Following the economic crisis, the number of NVM members fell from 4,200 in December 2008 to 3,900 in June 2013, but are now picking up again. NVM Chairman Ger Hukker says the achievement is “an additional signal that the Dutch housing market is on the right path and that the real estate sector attracts employment.”
The demand for holiday homes is also increasing sharply. In 2014 around 1,100 recreational homes were sold, almost three times more than the 400 in 2012, but still below the 10-year average of 1,500 homes per year, according to an Urban Planning Bureau report.
However, it’s another positive indicator on top of many others at the moment for the Netherlands market, as consumer confidence builds.