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First-quarter investment volume falls by 63%

Investments in commercial real estate return to 2015 levels

April 13, 2023

A multi-story apartment building, photographed from a low angle, looking up towards the sky. The building has a distinctive angular corner closest to the viewer, creating a strong geometric shape against the backdrop of a bright blue sky. The architecture of the building features a series of balconies protruding from the façade, each with glass balustrades that reflect light and contribute to the modern aesthetic. These balconies are arranged in a staggered pattern, providing outdoor space for residents on each floor. The building appears to have at least eight visible levels, including the ground floor. The color scheme of the building is neutral, with light walls that could be white, beige, or light gray. The edges of the balconies and the bottom have a darker tone, possibly dark gray or black, which contrasts with the lighter walls and adds depth to the design. The windows and glass doors leading to the balconies are large and appear to allow plenty of natural light into the interior spaces. Some balconies have objects on them, such as plants or garden furniture, suggesting that residents use these spaces for relaxation or decoration. The sky is vibrant blue with no visible clouds, indicating clear and sunny weather. The sunlight casts shadows on the building, accentuating its three-dimensional.

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Irene Martini

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The first quarter of 2023 saw €1.4 billion invested in commercial real estate in the Netherlands. This represents a 63% fall in the investment volume compared to the first quarter of last year, when it was €3.7 billion. Compared to the long-term average, this represents a fall of 57% and marks the lowest level since 2015, reports CBRE Nederland, a division of the listed CBRE Group, the world’s largest real estate consultancy firm, based on the first-quarter figures for 2023.

The sharp increase in the cost of funding and subsequent decline in value in the real estate market are the main cause of this fall. However, in addition to the macroeconomic trends, a whole swathe of new regulations and legislation is also creating uncertainty among investors. Recent announcements include: an increase in transfer tax, changes to box 3 on the income tax return, a significant adjustment to rent controls, the abolition of fiscal investment institution (FBI) status and the abolition of the transfer tax exemption on real estate companies’ share transactions. The slow process of issuing planning permission in the Netherlands is also causing difficulties for investors. This is especially deterring foreign players from investing in the Dutch real estate market and in housing in particular.

Uncertainty about pricing and book value

Uncertainty about inflation and the volatile interest rate in the first quarter created further uncertainty among investors with regard to the future pricing of real estate. As a result, there is plenty of interest from investors to invest in real estate, but they have so far opted to defer decision-making. On the supply side, the difference in the book value of real estate and the actual market price is causing investors to exercise restraint. Selling real estate below its book value is proving challenging in practice.

International investors increasingly absent from the housing market

On the housing market, the profitability of new-build projects is proving difficult to sustain. If the flexibility is available, project developers are shifting from the owner-occupied sector to the rented sector and vice versa. Project developers are also seeking out options for enabling new-build projects to go ahead, for example by building residential care facilities.

CBRE has observed a shift in capital flows on the investment market with regard to new-build housing. In 2022, prior to the introduction of the announced rent controls, some 30% of residential investment transactions involved purchases by a foreign investor. That figure fell to 8% in the first quarter of 2023. This provides confirmation that international investors are looking to direct their housing investments elsewhere, primarily as a result of the changed investment climate caused by the additional regulation.

Despite this, the investment volume on the housing market has seen less significant falls than those on the offices or retail market. This is partly as a result of three transactions involving housing complexes that cater to all life phases, accounting for almost a quarter of the total volume. These housing complexes are not affected by the upcoming regulation, partly because of their care connection.

Expectations investment market 2023

After a very quiet first quarter, CBRE expects to see activity pick up again in the second quarter of 2023. A potentially more stable capital market interest rate will help to increase price stability and certainty. Falling book values will begin to approach actual market value, bringing the prices buyers are willing to pay closer to vendors’ expectations and resulting in increased activity on the market. However, CBRE still only expects to see a proper return to the dynamic on the commercial real estate investment market after the summer.

About CBRE Group, Inc
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm and a premier provider of critical infrastructure services (based on 2025 revenue). The company has more than 155,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves clients through four business segments: Advisory (leasing, sales, debt origination, mortgage servicing, valuations); Building Operations & Experience (facilities management, property management, flex space & experience, data center solutions); Project Management (program management, project management, cost consulting); Real Estate Investments (investment management, development). Please visit our website at www.cbre.com.