The pace of capital value depreciation in the Dutch property market has accelerated over the second quarter, at -2.1%, according to the ROZ/IPD Netherlands Quarterly Property Index, up from -1.5% over the first three months of the year.
The annual change in capital values in the Dutch market for offices was -9.9%; while it was -6.7% in the residential market and -5.0% in retail.
This continued pressure on capital values brings the 12-month change to -7.0% - a considerable decline for such an historically stable property market. The annual change in capital values in offices was -9.9%; while it was -6.7% in the residential market and -5.0% in retail.
While capital growth decline is shallower than Q4 2008's decline, at -3.7%, its increase relative to Q1 is the result of further yield expansion. In the three dominant sectors of the Quarterly Index, initial yields all rose over the second quarter; in retail by 20 basis points to 6.5%, in offices by 10 basis points to 7.5% and in residential also by 10 basis points to 4.7%. Notably the yield expansion in offices was the fourth consecutive quarterly rise.
Rental pressure has crept into the industrial and retail sectors over the second quarter, falling negative, at -0.4% and -0.1%, respectively. In offices, there was flat rental movement, while in the residential market, rental value growth improved by 50 basis points to 0.6%. Income returns held steady over Q2 at 1.3% contributing to a quarterly and 12 month total return of -0.9% and -2.2%, respectively. Income returns no longer provide sufficient insulation to keep annualized total returns in positive territory.
ROZ Director Aart Hordijk: "On an annual basis, the capital growth of offices and industrials the sectors most sensitive to economic cycles are both now hovering around -10%. Also, the residential market, which is the largest segment in the ROZ/IPD Netherlands Quarterly Property Index, has a capital growth of -6.7%.
"In respect of the residential sector, this illustrates that those investors which bought properties using high leverage have pulled back from this market and this is now reflected in the price adjustments we have seen."