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Valuation for Residential Development Valuation for Residential Development

The Dutch housing market: records determine the face of it

16/02/2021
Highest price increase per square meter in the 4th quarter of 2020.

A real estate segment that is characterized by chronic shortages, sharp price rises, far-reaching interventions on market forces and constantly new environmental requirements. The main findings in the report are:

  • average square meter price at a record high in the 4th quarter of 2020
  • average price per home to EUR 365,000
  • record increase in residential investment volume of 12 percent to EUR 8.9 billion
  • safe haven for investors as well as healthcare and logistics real estate

Too little, too expensive and still popular

In the fourth quarter of 2020, despite the global pandemic and recession, the average house price in the Netherlands rose sharply by more than 11 percent to EUR 365,000 (EUR 3,010 / m2), which is the highest increase per square meter ever. Although the Dutch Major Banks predict that the housing market will cool down as a result of the corona crisis, Cushman & Wakefield does not expect a price decrease. However, a decrease in the number of transactions is expected of approximately 10 percent in 2021.

The residential investment market in 2020 invested EUR 8.9 billion in residential properties, a record volume and an increase of 12 percent compared to 2019. The share of residential investments in the total investment volume rose to 51%, making the residential market the only real estate segment in which the investment volume compared to 2019. An investment peak was registered in the last quarter of 2020 as a result of the increase in the transfer tax as of January 1, 2021.

Demand for residential investments will remain high in 2021. Despite the global pandemic, the segment, like healthcare and logistics real estate, has established itself as a safe haven with a low risk. Acquisition of existing real estate therefore prevails over new construction, in which the investment risks increase as a result of rising construction costs, scarcity of building materials, nitrogen measures, the sustainability challenge and the new environmental law. It was mainly Dutch pension investors who continued to invest in new-build homes with the aim of rejuvenating their investment portfolio and making it more sustainable.

The overstrained market situation has led to great pressure on residential real estate in recent years, causing yields to fall across the board. Yields are expected to stabilize in 2021 due to increasing regulation of, in particular, rental growth that national and local governments want to impose.

Shops offer opportunities

Despite the corona crisis, the pressure on living in the city remains great, especially from one and two-person households: students, young adults and seniors. The region, the urban areas outside the big cities, are seeing more and more influx of adults looking to start a family. The good physical and now - as a result of the corona measures - also the digital infrastructure make moving to the region easier, reinforced by the acceleration in the trend towards working from home more often. Despite the outflow to the region, large cities remain popular, house prices high and the housing shortage high. In addition to much more new construction, the transformation of vacant shops into homes is a sought-after opportunity. Housing associations also play an important role in this because of the more flexible market test that allows them to become more active in the middle segment.

Intelligent regulations, central management, integrated vision

In the latest edition of the annual housing market report, the real estate advisers at Cushman & Wakefield conclude that the enormous housing shortage requires, in addition to intelligent regulations from a reliable government, central control and an integrated vision of the future of housing, work and living. The increasingly large-scale challenge on the housing market, together with the sustainability challenge, population growth, changing population composition and the preservation of nature and high-quality public space require national coordination.

 

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