NVB: 'Government's proposal to abolish fiscal depreciation is a disaster for the office market'

GovernmentÂ's proposal to abolish the fiscal depreciation on commercial real estate will have a disastrous effect on the Dutch office market as a whole. Both Dutch and foreign investors will hesitate to invest in the Netherlands, resulting in an even more unbalanced office market.

The NVB (Dutch Association of Project Developers) has written to the government to abandon their idea to abolish the fiscal depreciation on commercial real estate. Already without this new regulation the NVB expects that no less than tens of thousands of jobs will disappear in this sector due to the present economic climate.

The new governmentÂ's proposal will only contribute to a further worsening of the office market according to the NVB. Â'As a result of these measures, net yield on commercial real estate will decrease and foreign investors will have second thoughtsÂ', according to NVB Chairman ing. H.J. van Harssel in his letter to the government.

Noticeably German investors, which still today consider the Dutch market realtively favorable compared to their homemarket, will be hit very hard. Â'There is a real possibility that these investors will withdraw completely from our market, or require dramatic increases in their yields. To Dutch project developers this would mean that it will become even more difficult to sell their developmentsÂ', according to Van Harssel. Mr. Van Harssel stronlgy advises the government to withdraw the proposal.

Also the NVB suggest additional fiscal possibilities to enable to upgrade vacant offices to apartments. Â'Vacancy rates, which will be here for some time, will mostly occur in un-marketable and elderly buildings. These buildings are very suitable to be transformed into apartment complexes and as such contribute to inner city renovation projects and at least partially will solve housing shortages in various cities. The NVB also advocates to simplify rules and regulations which would block this possible transformation.

(source: NVB)

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