In times of economic and political uncertainty, the changes trickle down across all fields, and real estate should, in theory, be the most affected one. According to many experts, the state of a nation’s real estate market is one of the primary resilience indicators, and the way that nation addresses the crisis speaks volumes about its preparedness and competence. In the past year, real estate hasn’t been the most comfortable to talk about, neither for agents nor for clients. On the one hand, clients keep asking about the state of the market, what the future holds, and if the investment they make today might provide a good ROI. On the other hand, agents face their share of uncertainty too because the market is a tough puzzle to crack right now, and there are even more factors to keep in mind before purchasing property. The state of real estate greatly depends on location and how local governments have managed to soften the blow of the crisis. The Netherlands, for instance, is a perfect example when it comes to adapting to emergency times and taking extensive measures to ensure that the real estate market remains stable.
Dutch housing market shows strength in turbulent times.
Recent data shows that the housing market in the Netherlands continues to show surprising resilience. Not only have house prices gone up, but the country is dealing with high demand and supply shortages. Statistics Netherlands (CBS) has found that the prices for residential properties have increased by 6.47% in the last quarter, and the average home price has increased by 8.15% compared to 2019.
ING bank estimates that, for the first quarter of 2021, the Dutch real estate market will cool a little bit and that, overall, homes will remain affordable because disposable income has increased and the unemployment rate remains low. Although initial forecasts have been somewhat negative, low mortgage rates played a major role in attracting new buyers.
Unsurprisingly, apartment properties performed the best in the past year, with a 10% price increase, followed by corner houses (+8.4%), detached houses (+7.7%), and terraced houses (+6.7%). Price increases were consistent across the entire Dutch territory, but there were regional variations. For example, prices in The Hague increased by 14.4%, in Amsterdam by 9.08%, while in Utrecht by just 1.1%.
What is the state of commercial properties in the Netherlands?
If residential properties have mostly had a favorable evolution, when it comes to commercial properties were affected to varying degrees. One study conducted by Dutch real estate investment firm Bouw Invest found that sectors like hospitality and travel were hit the hardest because consumer spending dropped dramatically, and there was no way providers could pivot and offer their services online, like it happened with retail. But an interesting case study that shows economic resilience is the gambling sector. For a few years now, casinos in the Netherlands have been extremely profitable, and the country emerged as one of Europe’s biggest markets. In 2018, the Dutch casino market had reached a market value of 230.4 million euros. When casinos had to close down, everyone expected the industry to come to a halt, but that didn’t happen. Even without land-based casinos, people continued to play online, where they found a selection of the best free spins bonuses, and operators welcomed them with innovative new features.
A percentage of players remained loyal to online games but, as venues started reopening, many people came back, so that today casino real estate continues to drive growth. Of course, most fans like to combine the two: they visit online platforms where they enjoy a no deposit bonus and other great offers, and they visit land-based casinos when it’s convenient to do that. We also need to keep in mind that when Dutch tourism comes back into full swing, the demand for casino properties will be high. Plus, the Netherlands has one the biggest recovery packages in the EU (they already exceed the amount allocated for the 2008 recession), so investor sentiment is overall positive.
But if the future of the casino industry looks promising, not all sub-areas of commercial real estate will have the same fate. For example, the owners of office buildings, especially the ones located on the outskirts of large urban centers, might have a hard time finding tenants. With the whole switch to work from home, more companies are considering embracing remote work indeterminately, making large office buildings redundant. Instead, there has been an increase in smaller office spaces downtown for businesses where only a few team members have to come in to work. Also, the current situation calls for new requirements for office buildings, so commercial real estate agents have to pay attention to factors such as the quality of the ventilation system and the size and layout of the rooms.
Overall, the situation of commercial real estate is mixed. While some sectors continue to drive growth, others are struggling to adapt, which makes more and more real estate agents diversify their property portfolios to mitigate losses.
Investing power doesn’t seem to drop.
The vast majority of investors believe that the Netherlands’ economy will bounce back quickly once the period of uncertainty passes, which is why they’re not hesitant to put their money here. According to the aforementioned ING study, 2020 showed incredible investor interest: 20% of sold houses went to private landlords, and the increase of the transfer tax from 2% to 8% led to an increase in activity at the end of 2020.
Ultimately, what we can learn from the Netherlands’ example is that the real estate market doesn’t have to swing in the event of a crisis and that agents can continue to drive profits even in turbulent times, provided that they learn to adapt and identify in-demand properties.