Roundup: Brexit gives additional boost to Dutch real estate market: experts

Britain's departure from the European Union (EU) provided new tailwind for the Netherlands's real estate market which has been maintaining an upward swing in recent years, according to Dutch experts.

"Firstly, the Netherlands could potentially attract London-based businesses seeking to relocate to continental Europe and, secondly, investors are moving away from London to other markets," Jeroen Jansen, head of research at the property services group Savills Consultancy, told Xinhua.

More companies are investigating the possibility to relocate to Amsterdam, which means more demand in office space in the Dutch capital and in turn lifting investment in real estate.

"We have seen an increase in companies seeking information about setting up an office in the Amsterdam metropolitan area," said Charlene Verweij, International Press Officer at Amsterdam inbusiness, the city's agency assisting foreign companies with their operations in the Dutch capital and surrounding municipalities.

"Our efforts are not focused on aggressive promotion, but on offering information about our investment climate and connecting those interested to the business network in the area," Verweij said.

But Jansen noted that additional growth as a result of companies relocating from Britain could be directly assessed only in 2017 or even after depending on the Brexit negotiations process.

What's certain is that as the British economy faces uncertainties after the June referendum, the Netherlands has been placed higher on the radar of investors seeking to broaden their real estate portfolio and to gain better yields in a time of historically low interest rates.

"The uncertainty surrounding and following the Brexit vote resulted in substantially lower investments in the UK," said Jansen.

Britain, he noted, saw a dramatic drop in real estate investment, reaching 56 percent in the first three quarters of 2016.

"As available capital needs to be allocated, it is logical for investors to identify other opportunities for investing in good quality property. It seems the Netherlands, and also countries like Ireland and Sweden, are profiting from the increased interest of investors," he added.

This would lead foreign investors' interest in the Netherlands, which has increased substantially over the past four years, to new highs.

"Investors are aiming at diversification and as a result the transparent and competitively priced Netherlands has become a major destination for foreign capital," said Jansen.

Investment demand strengthened in the third quarter with some investors viewing Brexit as a potentially positive driver for the Dutch office market, global real estate consultancy group Cushman and Wakefield said in its report.

It estimated that investment volumes in the Dutch property market are on track for a record year in 2016.

The prices after falling about 20 percent in five years are now above pre-crisis levels and maintain an upward swing, with the highest rise in one year since 2002 at 7.4 percent recorded in the third quarter of 2016, according to the Dutch Association of Real Estate Agents (NVM).

Yields are higher than in other areas. Current prime net yields for offices, for example, in Amsterdam stand at 4.2 percent, higher than in London (3.5 percent), Berlin (3.7 percent), Frankfurt (4 percent) and Paris (3 percent).

Analysts attribute the prices lift mainly to the Netherlands' growing economy which boosts demand for office space and in turn pushes values. A structural residential housing shortage also plays a significant role, as well as the low interest rates which makes mortgages more affordable.

In addition, in the Netherlands buyers are still allowed to borrow more than the value of the house (102 percent) allowing them to enter the market even with high prices.

The Dutch capital is ranked eighth among the cities most at risk of a housing bubble, according to a UBS Group analysis.

Despite the warning, Cushman and Wakefield researchers noted that "demand is robust, with a broad range of overseas buyers targeting the industrial sector in search of attractively priced and secure income opportunities."

Foreign capital invested into the Dutch property market accounts for two thirds of total real estate investment.

According to Savills, total investment volume on commercial assets in the Dutch market, including offices, industrial and retail assets, reached 5.7 billion euros (6.19 billion U.S. dollars) in the first three quarters of 2016. Last year total investment was 8.1 billion euros.

"Germany remains the top foreign investor, while British and American buyers follow," said Liesbeth Kramer of NVM. Endit