Netherlands Real Estate Market Outlook 2024

Dear Reader,

Welcome to the Real Estate Market Outlook 2024. In this report, we review the main developments in the real estate investment market in 2023, and reflect on what lies ahead. Whereas the past few months were characterized by hope and optimism, the expected turnaround did not materialize: it was a quiet real estate year. And although 2024 will not be marked by large investments nor transaction volumes, the market is increasingly recovering and stabilizing. So less uncertainty, and tentative improvement.

Snowball effect

Investors still had to get used to a new reality in 2023. Falling asking prices and rising financing costs caused depreciation of property values. Yields came under pressure, with no clear end in sight. These developments set in motion a snowball effect, which soon extended the unpredictability of real estate investments to the entire investment market.

Hope for recovery

None of these trends are new: the first signs were already visible in late 2022. Yet the intensity and duration of this dip came as a surprise to many. No wonder that investors focused on the near future last year, hoping for a quick recovery and regained enthusiasm. The opposite turned out to be true: interest rates continued to rise, inflation accelerated and transactions took a long time. Although total malaise was feared, the impact on the market as a whole remained relatively limited. Investors took their losses, but there was no sign of a spike in bankruptcies.

Room for investment

Now that the inflation peak is behind us, interest rates seem to be stabilizing at higher levels. This creates a clear consensus: we need to redetermine real estate values, given the changed market conditions. Only if we bring real estate valuation in line with the current market situation will it be possible to capitalize on opportunities. Meanwhile, rental growth and returns are rising as a result of strong demand for high-quality real estate. Combined with the expected gradual decline in interest rates, this creates more room for investment. We will see the first signs of this during 2024 – but the pace is still unclear.

Calmer waters

The market is now more stable and predictable than it was a year and a half ago. The first investors are already getting in, and it is only a matter of time until the market starts moving again at full speed. This development will only really start to gain momentum once institutional investors dare to take the plunge again. This will require a somewhat longer period of stabilization.

Our Market Outlook is excited about the opportunities for real estate investors in this recovering, stabilizing market. We hope it helps you with your investment strategy for 2024.