Commercial real estate in the Netherlands is extremely popular amongst international real estate investors, as shown in a recent analysis of market dynamics by international real estate advisor Cushman & Wakefield. During the first half of 2017, some EUR 8.1 billion was invested in Dutch real estate, of which 65 percent originated from foreign investors, the largest share ever registered.
Frank van der Sluys Head of Research Cushman & Wakefield, says: "We expect the record volume of EUR 14.8 billion invested in commercial real estate in 2016 will be broken this year. Even more since investments in our sector often trend upward during the second half of a year. Most noteworthy is that the healthy interest by foreign investors is driven not only by the real estate itself, but also by the strong economic, social, political and cultural fundamentals of our country".
Investment volume compared with stock
The fact that the Netherlands is perceived as a safe haven is also evident from an analysis by Cushman & Wakefield, which provides insight into cross border investments in 40 different countries in 2016. The Netherlands is on 7th position in this ranking behind the United States, the United Kingdom, Germany, France, China and Australia. Frank van der Sluys explains: "With a seventh position, the Netherlands enjoys an exceptionally high position in this international ranking, but this rises further if we divide the investment volume by stock. In doing so, the Netherlands appears to be the world's most popular destination for real estate investors.
Influence & risk factors
Dutch real estate is currently in high demand, partly because investors often book a lower return on alternative investment products, interest rates are relatively low and competition on the investment market in core European cities, such as London and Paris, is very high, which means that investors are switching to alternatives in Europe. Amsterdam is particularly well positioned in this respect. International investors, who focus on markets and regions that they do not know well, often assess the fundamentals of those countries and regions in order to obtain a sound risk profile. Seen in an international perspective, the fundamentals of the Netherlands are very good, so that investors perceive the risk profile as favourable.
Cushman & Wakefield has identified six risk factors for fifty different countries around the world: a country's budget deficit, the volume of trade with the United States, energy imports, political stability, growth in Gross Domestic Product and expected inflation. A score is then given to each factor, whereby the highest score (1) is awarded to the country with the lowest risk of the factor in question and the highest score (50) for the country with the highest risk of the factor in question. The total score, the sum of all individual scores, determines the final ranking of each country. According to the analysis, the Netherlands is ranked third as safe haven. Norway (1) and Denmark (2) are much more internally oriented property markets than the Netherlands. A relatively large part of the investment volumes in these countries is realised by domestic investors. The Netherlands is characterised by a significantly more international real estate market, as appears from the high share of 65 percent of the total investment volume realised by foreign investors.
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