The total return for 2006 on all commercial property in the Netherlands was 12.5%, the highest since 2000. This positive result was significantly higher than the bond return at - 1.1%, but below the equity return of 18.5%.
Total returns in 2006 outperformed those in 2005 across all sectors, particularly in the office sector, with 11.5%, which saw an increase of 4.5 percentage points compared to 2005. However the retail sector delivered the highest total returns, with 14.9%.
Capital growth on all property increased to 6.6% in 2006 and income return on all property decreased marginally to 5.6%. The increase in capital growth explains the strong total returns for the office sector, from 0.1% to 4.3%, but income returns also increased marginally in this sector as vacancy levels declined. The other property sectors all experienced a decrease in their income returns. The highest income return was for the industrial sector, at 7.6%.
Capital growth was driven by further falls in yields, but also by improving rental value growth in the main sectors and increases in the vacant possession values of residential units.
Ian Townson, Associate Director for IPD's Netherlands services, commented: "Although equities have seen improved performance in recent years, property still remains the best performing asset class over the 12 year history of the index. The steep falls in yields seen last year have been repeated, with a further boost from improvements in rental value growth."