IPD has published the ROZ / IPD Netherlands Annual Property Index for 2008. According to the index, investment in Dutch commercial real estate returned 3.3% last year, compared to 11.3% over 2007.
Following a pattern so far consistent across the continent, property significantly outperformed equity markets, which returned -45.2% (Source: Morgan Stanley Capital International Inc.), but lagged behind bond markets, which returned 12.3% (Source: UniCredit Banca Mobiliare). The annual total returns are so far among the strongest reported in Europe for 2008, closely followed by Danish commercial property, which returned 3.1%, while Sweden fell by -3.3% and the UK fell by -22.1%.
The best performing sector of the four principal markets was Retail, returning 5.5%, followed by Industrial, at 4.0%, and Residential, at 2.8%, while the biggest performance lag was Offices, which recorded 0.9% for 2008.
Overall, the drag on returns compared to 2007 was falling capital values which recorded negative returns for all four main sectors; All Property capital growth was -1.7%. The steepest capital value declines were felt in the Offices, where returns were weakest, at -5.5%.
Income return over 2008 was broadly in line with 2007's levels, falling just 10 basis points to 5.1%, led by Industrials with 7.3%. The Industrial sector has consistently posted the highest sector income return since records began back in 1995. Yields moved out only marginally across the sectors, up 10 basis points on 2007 to 5.7% on an initial yield basis.
At the launch of the results today in the Netherlands, IPD co-founding director Ian Cullen said: "A combination of robust income return across the sectors, supported by rental value growth, and only a mild deterioration in capital values has helped insulate the Netherlands from the levels of property re-pricing seen in other major European countries. The exception has been in Offices, where the global recession has slowed demand for assets in the sector, causing capital growth to fall by -5.5% over 2008. Over three and five years, annualized total returns for all property was 9.0% to the end of 2008 for both periods."