In the dynamic landscape of the Dutch Commercial Real Estate (CRE) market, the year 2023 left its mark, setting the stage for a potential recovery in 2024. As our latest 'Market in Minutes – The Netherlands – Full Year 2023', penned by Savills Wouter van ‘t Grunewold, points out, a year of challenges, adjustments, and a sustainability-drive awaits us.

Occupier market: Adjustments in leasing activity

Leasing activity in the Netherlands saw a 25.8% decline in 2023, with the office (-26.6%) and industrial & logistics (-27.2%) sectors experiencing notable challenges. The critical evaluation of space requirements by businesses signals a cautious approach, reflecting the impact of unfavourable market conditions.

Investment activity and yield movement: caution persists

Investors exercised caution throughout 2023, resulting in a significant 57.3% decline in investment volumes compared to the previous year, with Q4 2023 decreasing by 64.4% compared to Q4 2022. The total investment volume for the Netherlands in 2023 was €8.03 billion. Savills anticipates a gradual convergence between Gross Initial Yields (GIYs) and the yield on government bonds in the coming months, emphasising the cautious sentiment prevailing in the market.

ESG as the key demand variable in 2024: sustainability affecting leasing activity

Environmental, Social, and Governance (ESG) factors are taking centre stage in leasing decisions. In 2023, Savills saw a noteworthy increase in the share of ESG-compliant properties across offices (8.7%), retail (4.7%), and logistics (2.4%). This sets the tone for an ongoing trend where sustainability affects leasing activity in 2024.

Recovery: 2024 – A year of transition

Savills foresees 2024 as a year of recovery for the Dutch CRE market, driven by the end of European Central Bank (ECB) interest rate increases and a stabilised economy. However, it is important to remain cautious with sought-after ESG-compliant buildings potentially facing supply constraints in 2024 and the direction of the global economy is largely dictated by stability, which could be jeopardised by various ongoing (geo)political events.

The ‘Market in Minutes – The Netherlands – Full Year 2023’ provides a deep dive into the transformative landscape of the Dutch real estate market throughout 2023, highlighting key findings and projecting a nuanced outlook for 2024.

Read the full report here.