Commercial real estate investment in Amsterdam reaches historic high in 2016
Commercial real estate investment in Amsterdam showed a strong increase in 2016 (+63% on 2015) thanks to a great Q4, according to the BNP Paribas Real Estate-Amsterdam office market report.
Economic recovery and take-up upturn continue in 2016
The Netherlands has benefited from lively economic activity for the last few years. GDP growth maintained a good pace with 2.2% in 2016. Employment growth also followed a dynamic trend with 1.8%. Amsterdam figures are even more positive. Driven by these positive economic fundamentals, the office occupier market outperformed previous years (+14% up on 2015) thanks to a buoyant second half-year. The market in 2016 was characterised by the dominance of small and medium-sized transactions. This trend shows that the performance of the market is due less to traditional big companies such as banks than to smaller businesses such as service providers or start-ups from the creative industry. Economic growth in the Netherlands should pursue the same way in 2017. Office take-up in 2017 should therefore be in line with 2016.
Vacancy follows a downward trend
The vacancy rate in Amsterdam continued to contract in 2016 (-7% over 2015) to reach 13.6%. It decreased to minimal levels in prime locations such as Amsterdam CBD (South Axis) and the City Centre. Consequently, prime rents continued to rise (+5% over 2015). This scarcity of available office spaces in prime locations benefited secondary office sub-markets which came under consideration as an alternative. Consequently rents in these locations also increased because of occupier interest. Furthermore the office market is subject to large scale transformations and redevelopment projects which magnified the vacancy rate decrease. New completions are expected in 2017 that will probably be neutralised by the withdrawal of vacant offices as transformation goals set by the city council are at 60,000 m² for this year. A slight decrease in the vacancy rate is expected for 2017.
Amsterdam investment market sees a historic high
Commercial real estate investment in Amsterdam showed a strong increase in 2016 (+63% on 2015) thanks to a great Q4. It recorded a new historic high with €3bn invested. This performance was focused on office investment (+78% of the total). The positive commercial real estate market conditions observed over the past two years in Amsterdam led to an increase in the investment market attractiveness. Proof of this is the growing share of foreign investors where Americans are the largest contingent followed by Asian investors. The largest deals were signed in Amsterdam CBD and City Centre and involved both existing properties and projects that are currently under construction. Due to a lack of product after such an active year, 2017’s investment volume is expected to diminish.
Source: BNP Paribas Real Estate