The Dutch economy has hit the bottom of the cycle and appears to be stabilizing with improvements in GDP. This, according to Savills, will spark a renewed interest from investors who wish to take advantage of price readjustments before a full recovery.
The international real estate advisor reports major high street property yields moved out up to 125 bp to 5.5% but have stabilised throughout 2009. In secondary locations yields are at between 7-7.5% and in shopping centres prime yields stand at 6.5%. Retail warehouse yields are at 8%. This pricing readjustment, says Savills, means now is the time for investors with capital to buy before an increase in sales in 2011, followed by a significant boost in take-up in 2012, which will spark larger investment volumes.
Savills states that the market has seen a number of new entrants in 2009, despite a take up of 230,000 sq m (2.4 million sq ft) between Q109-Q309 compared to 430,000 sq m (4.6 million sq ft) in 2008. United Nude, In Fine, French Connection, Koton, New Look, Primark and Brandnew Store have all launched in the Netherlands this year. Furthermore, within the food market sales have remained stable and a bid by supermarket chain Jumbo to extend its 128 network by taking over 300 supermarkets from Super de Boer signals a significant shake up in this sector.
Jan Peter Hebly, Savills managing director of retail in the Netherlands, says: "The retail market is facing challenging times with low sales and short term forecasts not being positive. These are the times where the good retailers will prove themselves. The same goes for the property market: transactions are low and interest is mainly focused on prime locations. For investors with capital this market does offer interesting possibilities."
Current vacancy rates are at approximately 8% and mainly on secondary sites with prime locations showing no vacancy although there is less retailer demand even at these sites. The impact on rents in primary sites has been a stabilisation of pricing, compared to increases of 3-4% per annum prior to 2008, and in some areas there have been rental decreases particularly secondary sites which have seen 5-10% falls. The highest rents were found in Kalverstraat in Amsterdam with prime rents at 2,500 per sq m (232 per sq ft).
In terms of development pipeline, Savills finds that future developments are under strain. Whilst those that are under construction or close to construction will generally be realised, around 400,000 sq m (4.3 million sq ft) of planned developments for upcoming years have been cancelled. Meanwhile new projects being added to the pipeline have declined by a third compared to 2008.