The Netherlands has one of the most active and successful property markets in Europe, and one that welcomes international investors. Jones Lang Wootton estimates that 50% of market activity comes from non-Dutch players.
In 1996 - the last year for which full figures are available - Dutch property produced total returns of 11.5%, according to the IPD/ROZ index, which is now established as the main institutional benchmark. This compares with 10.4% in 1995.
Residential property forms a large part of most Dutch funds: for example ING owns 30,000 homes in the Netherlands. And 1996 saw strong performance of the residential sector with overall returns up from 12% to almost 15%. This means that the IPD/ROZ index is not entirely appropriate as a benchmark for purely commercial investors but it is still considerably more useful a tool than anything found elsewhere in Europe, apart from in the UK and Ireland.
In 1996 both offices and retail saw overall returns static at around 9%, while industrials improved from 9% to 12%, according to the IPD/ROZ index.
This combination of strong performance and a comparatively transparent market means that the Netherlands is increasingly attractive to international investors. Jones Lang Wootton estimates that as much as 50% prime property acquisitions are now made by foreigners.
Germany's open-ended funds have been leading the way with DGI, DEGI, CGI and BfG ImmoInvest all buying. Initial yields on prime Dutch offices are around 7%, considerably more attractive than the 5% obtainable in Germany and in a more buoyant occupational market.
And there are growing signs of American interest: ABKB LaSalle, one of the leading managers of US real estate investment trusts (REITs), opened a Dutch operation in 1997, as did Security Capital, one of the biggest REITs specialising in the cold storage sector.
In part this reflects strong Dutch interest in US real estate: ING holds $1bn out of the total $120bn market for REITs but ABKB LaSalle will also be looking to catch the growing wave of interest in indirect property investment within the Netherlands. The big quoted property funds Rodamco and Wereldehave are already dominant players and they can be expected to grow as more Dutch pension funds are looking to withdraw from direct property ownership while maintaining their exposure to the sector through indirect products.
Latest figures from Dutch agent Van Gool en Partners show that the Dutch investment markets may be reaching something of a plateau. Having led most of Europe out of recession, there are now signs that rents, especially in the key Randstad office centres of Amsterdam, Rotterdam, The Hague and Utrecht, may have seen the best of their growth.
In Amsterdam, for instance, Van Gool calculates that office rents soared by 30% during 1995 and 1996 to stand at Dfl550 ($270)/sq m/year. But there has been no evidence of further rental growth during 1997. This is partly due to a lack of stock in the letting market, which means that deals to prove new rental levels are few and far between. Van Gool puts total availability of Amsterdam offices at 273,248 sq m, less than was let in the first nine months of 1997 alone.
A further 100,000 sq m of offices are under construction in Amsterdam, but this is unlikely to be enough to meet demand. And in the longer term the Dutch government is pledged to control new development in locations which are not served by public transport. This will have the effect of further restricting supply, which will underpin current values. Graham Parker