The IPD Netherlands Annual Property Index, released yesterday, showed that all sectors of Dutch investment property delivered a total return of 1.2% in 2012, compared with 3.9% in 2011. Due to inflation (CPI) of 2.9%, real return showed a return of -1.6% in December 2012, again compared with -2.0% in December 2011.
These results show that the property investment market is not safe from the Dutch economy, which has slipped into a third recession since the beginning of 2009.
Although the index showed lower performance this year against other major asset classes, with Equities showing the highest return at 19.3%, followed by property equities at 10.7% and bonds at 8.7% (JP Morgan 7-10 years), over a five year period, direct property still outperformed both equities and property equities.
Same as the last two years, for all sectors income return was stable at 5.4%, therefore the capital growth of -4.0% in 2012 was the cause of the declining total return. The cumulative capital growth was -12.6% nominal over the last five years.
Between the four major sectors there is marked variation. The Retail sector showed the highest total return with 4.2%, while Offices showed the lowest total return of -2.7%. Residential showed a total return of 0.6%, with Industrial at 1.5%. All sectors showed a negative capital growth with the lowest at -8.8% for Offices.
Arnoud Vlak, Managing Director of IPD BeNeLux, said, “Depreciation of investment property has not ended during 2012 in the Netherlands. While the retail sector showed positive capital growth in the last two years, this year, for the first time since 2009, all sectors showed a depreciation of underlying property. Offices especially are not showing strong results. The vacancy rates in this market, one of the important indicators for capital growth, are at an historical high due to the present economic downturn and overproduction of newly built office space in the years before.”