Savills expects substantial rental growth in coming years

29 August 2018

According to Savills, rents will grow substantially with percentages up to 5% per year. This strong rental growth is driven by the favourable economic situation combined with a shortage of supply and lack of new development. This applies particularly for the big cities, as is shown in Savills research report Dutch Market in Minutes - 'Indian summer’ by expected rental growth.

Scarcity drives rental growth
Take-up in 2018 has been approximately 4.9 million sq m so for, which is 7.5% lower than the volume for the same period in 2017. The decrease in take-up is caused by a lack of availability, which prevents occupiers moving up from their current locations and thus limiting the number of relocations. Scarcity in the real estate market has already put substantial upward pressure on rental prices. The expectation is that this growth will continue for the reasons mentioned above. A study by Savills reveals a significant correlation between vacancy rates and rental prices. Based on this correlation, predictions for future rental growth can be made.

Clive Pritchard, Head of Country at Savills in the Netherlands, says: “In recent years, we have already seen substantial rental growth in offices in the Randstad of 4.6% and Amsterdam of 5.5%. For the next two years, we expect further annual rental growth of up to 5% in Amsterdam. In addition to the office market, we expect rental growth to occur in the residential and industrial markets as well. For the retail market in general, rental growth is unlikely as supply remains ample.”

Office market surpassed by residential market
Savills research report also shows a shift in the allocation of capital. The office market, for many years the largest contributor to the total investment volume in Dutch real estate, has been surpassed by the residential market in 2018. Currently, €3.5 billion has been invested in offices and €4.0 billion in residential real estate. Another shift in the investment market is the share of foreign capital. In 2017, the share of cross-border investment stood at nearly 66% while in the same period in 2018, this share has only reached 49%.

Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “The high share of Dutch investment in the residential sector has been caused by several portfolio purchases, and in particular a portfolio purchase made by Vesteda for €1.5 billion. This purchase did not only have a major impact on the total investment volume, but it also significantly increased the share of Dutch investors."

Download the full report here

 
 

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Key Contacts

Clive Pritchard

Clive Pritchard

Head of Country | Managing Director
Investments

Savills Amsterdam

+31 (0) 20 301 2031

 

Susan Hatzmann

Susan Hatzmann

Communication Coordinator
Marketing

Savills Amsterdam

+31 (0)20 301 2066