Given the low interest rate environment and the yield spread offered by real estate, investors’ capital inflow into real estate markets remained strong last year. This resulted in a total investment volume of € 18.5 billion, very much driven by the large appetite from international investors. While this was the third highest volume ever recorded in the Netherlands, it did remain 12% behind last year’s total.
We expect investors’ appetite to remain high for real estate investments, due to the fact that real estate continues to prove its value in terms of adding diversification to investment portfolios and the total returns it offers compared to interest rates and other asset classes.
The Dutch residential investment market accounted for 30.5% of the total investment volume and saw € 5.6 billion in investments in 2019, compared to € 7.0 billion in 2018. Residential property was the largest segment of the Dutch real estate investment market, as it was in 2018. The lack of attractive products was the main reason for the subdued investment volume. Investor interest remained high and resulted in a further contraction of net initial prime yields in all major cities, with the exception of Amsterdam, where prime yields remained stable at a low 3.2%.
Investor key factors | 2018 | 2019 | 2020 forecast |
Prime net initial yields (excl. purchase costs, year-end) | 3.20% | 3.20% | → |
Investment volumes (€ bln) | € 7.0 | € 5.6 | → |
Source: JLL