COVID-19 Impacts on The Netherlands Real Estate

Jos Hesselink • 21/05/2020

After receiving a lot of criticism from the general public for not providing clear guidance on reopening, the Dutch Government presented a roadmap for opening society and the economy which consists of 3 phases until September.   

  • 11 May: primary schools, day care, contact-based professions (hairdressers and alike), libraries and group outdoor sports.

  • 1 June: restaurants, terraces, cinemas, museums and other cultural institutions may receive up to 30 visitors. Terraces are not limited in capacity as long as 1.5 metres distance can be respected. One household can share 1 table (without distancing). Furthermore, high schools will reopen with 1.5 metres distance protocols, primary schools will reopen in full (with all distancing rules being lifted). Visitors are partially allowed back in elderly / nursery homes. Finally, all public transport will resume the usual schedules. 

  • 1 July: restaurants, terraces, cinemas, museums and other cultural institutions may receive up to 100 visitors. Campsites / holiday parks can reopen. Finally (mass) meetings up to 100 persons are allowed, which means churches, wedding venues, convention centres will reopen.   

  • 1 September: all (contact) sports, saunas, gyms, sex workers and casinos are back in business. Large scale gatherings remain forbidden for as long as there is no vaccine/medicine. That means football matches will be played without spectators and festivals cannot take place until further notice.  

Practically all shops are now open, life as we knew it gradually returns, moreover as the country takes a radically different stance on private use of personal protective equipment. It is not necessary to wear face masks in general and is limited to use on public transport where keeping a distance is simply not always possible. Even hairdressers are not required to wear face masks, however reservations are mandatory, and the client will need to state that they do not show any symptoms of the coronavirus.  

Meanwhile, the economy benefitted slightly from the not-so-tight lockdown as the first quarter showed a GDP retraction of 1.7%. It seems a rather modest decrease compared to European countries whose lockdowns were more severe such as Belgium -3.9%, France -5.8%, Spain 5.2% and Italy 4.7%. Sweden on the other hand saw its economy remain virtually stable at -0.3%. But as these economies are integrated deeply, there will be a significant impact for all countries in, and associated with, the Eurozone.   


15 May

Last week the local Amsterdam newspaper Parool stated that long queues are typically associated with phenomena like economic crises: queues in front of social security offices, queues in front of bargain stores or food banks, but certainly not in front of IKEA…

After having voluntarily closed its stores from 17 March quite suddenly (in fact customers were asked to leave), IKEA decided it was time to reopen, albeit without Smaland and meatballs as the Swedish furniture giant asked its customers not to indulge in fun shopping but to restrict visits for a specific purpose.   

IKEA was in fact one of the last big box retailers to reopen, as DIY stores, garden centres and other furniture malls never actually closed and were implementing social distancing measures throughout.  

Although the Netherlands is officially still in a ‘smart’ lockdown, life is gradually starting up again and shopping appears to be an inseparable part of ‘normal’. As schools are set to gradually reopen from Monday 11 May following the already increased movement for those under twelve, the public is eagerly looking forward to 20 May when hospitality, F&B’s and hairdressers might reopen, depending on the success of the current set of measures.  

30 April

Concerns over the virus outbreak by the general public are slowly but certainly being replaced by concerns over the economy.  

The recently released outlook by the IMF and the first forecast of the country’s budget deficit by the Dutch Finance Ministry was grim. The IMF has forecast a deep recession of 7.5%, while the budget deficit for 2020 is forecast to be around 12% of GDP, approximately EUR 92 billion.  

The consequences for the national debt are profound and is to skyrocket from 48.8% of GDP to 65.2% in a single year and has never been seen before.  

Until now the Dutch economy has enjoyed an above-average growth for several years in a row. A thriving economy, based on solid institutions, offered real estate investors, among others, attractive opportunities and above all a safe haven. The Netherlands has profited from the global search for yield quite well. That will at least be temporarily different from now on. It is the open, export-oriented economy combined with a small domestic market size that now makes the Netherlands vulnerable as world trade is declining sharply. 

The Dutch economy is heavily entangled with the economies of EU member states. On the one hand it heavily relies on trade with its neighbouring countries and, more in general, the domestic demand of the Eurozone members: two thirds of Dutch exports are destined for the Eurozone. On the other hand, almost 40% of the Dutch 2019’s investment volume was composed by Eurozone buyers.  

The rather strict position of the Netherlands towards financial aid to the badly affected countries in the south of Europe seems therefore rather awkward from multiple perspectives. Not only is it quite embarrassing from the perspective of solidarity, as it was one of the primary reasons on which the European Union was founded, also it does not seem to make sense from an economic point of view when export markets are on fire.  


23 April

Now the ‘intelligent’ lockdown enters its sixth week and the number of new COVID-19 hospitalisations is rapidly falling, the Dutch are eagerly looking forward to having some of the movement restrictions lifted. This week, more information will become available on how the Government will be taking next steps towards reopening society and the economy as of 28 April. 

The Government is specifically calling for the various sectors in the economy to draw up plans themselves on how to get a six feet society working for their businesses for a longer duration of time. Cushman & Wakefield has responded immediately by redesigning part of the Amsterdam office into a six feet office concept, providing office workers a safe workplace in a post lockdown era. This initiative was quickly picked-up by national news and is now considered to be an example for other sectors.    

Within the commercial office markets, both investors and occupiers are actively trying to assess and quantify future office space demand. There is broad consensus that in the longer term the need for office space will decline, due to the lessons learned from effectively working at home. In the short run, working in an office will require additional workspace, which will ultimately lead to a decrease of available workstations. Thus, the six feet office concept may well prove to be a last push towards the truly activity-based office concept where people meet, create and inspire each other rather than sitting behind a desk wearing headphones cancelling surrounding noise. Great ideas were never invented in a silent place. Let’s use the full potential of the office by putting the lessons into practice by working from home! 


16 April 

It has been 30 days since we entered an ‘intelligent lockdown’ as a country. Schools, meeting places, F&B establishments and gyms all had to close as of 15 March. Retail is exempt from this directive and has been allowed to remain open. Recent research by Locatus showed that approximately two thirds of all shops are succeeding in keeping their doors at least partly open to the public in one way or another.

Now that the imposed restricting measures yield results that actually ‘flattened the curve’, more and more retail chains are preparing to re-open their shops in the coming days. They follow the example of measures already introduced by the essential stores, such as mandatory routing (one-way traffic), plastic protection screens at the registers and a maximum number of clients allowed in the stores. Retailers hope to return to a ‘business as usual’ as much as reasonably possible in the new reality of the six feet economy.  

Despite the light version of a lockdown - by European standards - the economic impact on the retail sector, on both retailers and landlords alike, will be nevertheless substantial. A round of intensive negotiations directed by Cushman & Wakefield has resulted in a 'Support Agreement Dutch Retail Sector'. This initiative, entirely setup by retail market stakeholders, provides retailers a 3 month postponement of rent payments. After this period, a possible waiver will be determined based on the actual loss of turnover incurred in the postponement period. Furthermore, landlords assured to not evict any tenants, while retailers in return have promised keep businesses open for as much as public safety allows.  

This agreement was made on a voluntarily basis and serves as a starting point for future arrangements between retailers and landlords. It also clearly illustrates the collective sense that we are all in the same boat. 


9 April

Our analysis of office occupancy, industrial premises and real estate investment market dynamics in Q1 2020 compared with Q1 2019, reveals the impact of the COVID-19 outbreak on the real estate market in the Netherlands.  

Q1 analysis (to 31 March for both 2019 and 2020) shows that the take-up in office and industrial property markets decreased 21% and 28% respectively and investment volumes fell by 21%.  

In March, the decrease was stronger with a drop in take-up for offices (33%), industrial (45%) and a halving (52%) of real estate investment activity.  

COVID-19 has a major impact on the real estate market, but it is also important to keep looking at market developments pre-pandemic.

Not all market trends are due to COVID-19 impacts. In some markets the signals had already turned red and those changes will accelerate and continue. For example, the decline of smaller core shopping areas or office markets in peripheral municipalities.  

In the markets where all signals had turned green, the impact will be temporary, such as in the hotel market in core cities or in logistics hotspots. They will pick up, as soon as things get back to normal.  

One thing is certain: the current crisis will be stored in our collective memory and we will continue to look at the world and the way we live, work, shop and live in a very different way. 

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