Key characteristics of all three markets are that cross-border investors accounted for up to half of the volume of transactions in recent years with the office sector struggling with high vacancies.
While the high vacancy levels have positioned the Dutch office market in a negative light internationally, the situation is not all bleak. Nor are all foreign investors resistant. International fund managers are finalising office transactions in Amsterdam and adding new assets to their Dutch portfolio. Clearly top locations still attract top investors.
This large supply of vacant buildings has led to development companies focusing more of their efforts on the redevelopment of offices. There is an increasing trend to transform vacant office buildings in city centres into housing, healthcare assets, nursing homes, education facilities and student housing. Redevelopment is the future of development companies.
Stringent planning rules in the Netherlands have long stifled the conversion of outdated offices and other buildings. But reforms to the system have been the catalyst for transformation. Conversion to residential would seem an obvious option given the shortage of housing in the Netherlands, which saw prices explode in the past two decades until the financial crisis hit. Meanwhile, the development of new office and retail space has virtually ground to a halt as local councils restrict new-builds with the exception of housing and other alternative assets such as hotels.
Looking ahead, Belgium’s economy is expected to suffer due to potential austerity measures, weak external demand and increasing unemployment levels, all of which might impact business confidence. As a result, demand is expected to see little change in 2013, although the core Central Business District and periphery markets should all remain key office destinations for both occupiers and investors.
Belgium is anticipated to see mild economic contractions in 2013 as export demand remains weak in the external market. Business confidence is also expected to remain low with the prospect of further austerity measures looming in the next year or two. As a result, the industrial market should see little change in the year ahead, with stability supported by theSME tenants who prefer to purchase and occupy rather than lease due to the relatively ‘safe bet’ of real estate. Antwerp and Brussels will remain key markets for both occupiers and investors, although the lack of modern supply is anticipated to continue hindering activity levels.
A market driven by change of use of assets and redevelopment requires a certain type of property professional. Reactive property management will not do anything for real estate returns and therefore there is a demand for development and creative asset management orientated individuals and those with town planning and zoning skills. We are seeing increased activity in these areas from regional and international clients who are confident in what is needed to drive performance.
Article first appeared in REurope Magazine, May issue.
Written by Timothy Rowe, Cobalt Recruitment