Savills

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Market in Minutes - the Netherlands - Q1 2024

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Read the latest developments in the Dutch real estate market below

Increased investor costs of capital and a weak occupier market continued to hinder transaction activity during Q1 2024. However, anticipated decreases in policy interest rates are poised to provide greater flexibility for real estate investments. For the remainder of 2024, transaction activity will be guided by leasing market dynamics, with investors focusing on sectors with robust fundamentals. Savills anticipates that the residential, retail, and (light) industrial markets will enjoy strong occupier demand throughout 2024. Although 2024 is expected to pose challenges, Savills believes that the worst has been behind the Dutch real estate market. Nonetheless, the current geo-political uncertainty and global economic volatility could inhibit a recovery in the Dutch real estate market.

Key findings:

  1. Investment activity - After hitting its lowest point in March 2023, investor sentiment for European real estate has increased by 27.9%. Even though sentiment increased, investment appetite still remains low across all sectors. Investment volumes decreased by 14.6% QOQ and 2.5% YOY to €1,708,817,838 in Q1 2024. Prime Gross Initial Yields (excl. Purchasing Costs) have remained stable across all sectors in Q1 2024. The residential market had its weakest quarter since Q1 2012, decreasing by 60.4% YOY in Q1 2024, largely caused by uncertainty regarding government regulations.
  2. Occupier market - Despite challenging business conditions, leasing activity has largely remained stable across most sectors in Q1 2024. However, conflicting macroeconomic indicators are creating disparities in leasing markets, with some sectors outperforming others. Logistics activity was particularly weak in Q1 2024, decreasing by 8.3% YOY. Office (+8.3% YOY) and retail (+11.3% YOY) leasing activity was notably higher due to stronger market fundamentals.
  3. The light industrial market - Strong market fundamentals are expected to boost investment activity in the light industrial sector throughout 2024. Sustainability and electricity availability will remain challenges. The light industrial market is known for its high electricity consumption, while declining electricity availability is threatening stable business operations. 70.5% of the light industrial LFA is located in an area with no electricity availability.
  4. Increase in market activity expected - Savills expects an increase in investment market activity in 2024 as investor confidence in the European real estate market rebounds in anticipation of cuts in policy interest rate. With the resurgence of investment confidence, investors are expected to feel more assured in bringing investment products to the market, whereby activity will be guided by leasing market dynamics.