Following the global downturn, The
Netherlands has been the slowest region of Northern Europe to turn
round real estate markets. However, economic indicators are
favourable and fortunes are influenced by Germany whose economy is
booming. Internos' third largest office is in Amsterdam and the
country accounts for approximately 40% of Internos assets under
management.
Economic characteristics
The Netherlands (pop 16.6 million) economy is well spread over
service (logistics very important) and industrial activities. There
is no dominant metropolis. Four main cities, Amsterdam, Rotterdam,
The Hague and Utrecht, all less than 1 million population, are
major real estate centres but cities at the next level - eg
Eindhoven, Tilburg, Almere, Groningen, Breda - are collectively
important. With 12% approx of GDP in exports to Germany, the
economy has been closely tied to that of its neighbour, with GDP
movements in close step. However, in 2010, with 1.8% growth, The
Netherlands lagged Germany which hit 4+% in some months. A key
sector of the economy is entrepot activities, where Rotterdam
leads, handling much of Northern and central Europe's imports and
exports. The banking sector is strong.
Outlook
As Germany prospers, an upward economy is safe to predict.
Unemployment levels at 5%± are better than most of Europe. But in
many parts of the country, vacancy levels remain high. Business
confidence is positive now but early 2011 saw consumer confidence
in negative territory (index -10). Shipping movements through main
ports are now above pre-crisis levels. Reports of rental movements
for 2008-10 were often misleading, failing to take account of
letting incentives which were large and habitual, now less
prominent at the prime end of the market. A return of consumer
confidence, such as seen in Germany may be a pre-requisite of
growth in future occupancy and in rents and this should return by
2012. However, The Netherlands is well past bottom of cycle in
economic terms and near or at bottom in real estate and should
yield real opportunities in the short term for investors looking
for total returns over 3-8 years.
Focus
With valuations below intrinsic worth, higher income returns
than other parts of Northern Europe. Bottom of cycle opportunities
such as recapitalisations able to generate attractive returns.
Geographically: Rotterdam and other industrial/ logistic areas tied
to export or German industry. With returning consumer confidence,
the retail sector is becoming increasingly attractive.