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Investment market for commercial real estate rebounds
Recovery of real estate investment market despite deterioration of Dutch investment climate in 2024
January 15, 2025
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The Dutch real estate investment market recovered in 2024, with an investment volume of €11.3 billion. The tilt in the ECB's interest rate policy and the prospect of an end to property write-downs caused a 38% increase over the previous year. Further growth in investment volume to €12.5 billion is expected for 2025. This notes CBRE Netherlands, part of the listed CBRE Group, the world's largest real estate consultancy. Most transactions were done by private investors and Dutch institutional parties. Due to a deteriorating investment climate and uncertainty in the market, the share of foreign investors fell from 58% to 35%.
The residential investment market was the main factor behind the growth in investment volume with a doubling of volume, driven mainly by large-scale disinvestment portfolios and the increase in larger new construction transactions. This segment attracted 37% of total capital, followed by the logistics sector at 27%. The office market experienced a historic low in capital allocation with only 14.9%, while the retail market remained stable with an investment volume of 10.4% of the total.
Office market recovery lags behind
Internationally, the Dutch office market lagged slightly behind the rest of Europe. As in all other commercial real estate sectors, the office investment market kept foreign investors away, partly due to the high transfer tax and fiscal uncertainty. Nevertheless, momentum increased, which was visible in the increase in the number of bids in larger transactions. These increases came mainly from Dutch investors, while foreign core investors were seen as major absentees. Erik Langens, Managing Director at CBRE, added: “Our expectation is that liquidity will increase over the next two years. This offers hope for further improvement in the office market, despite the current challenges.” Despite a trough in the share of total investment volume, the office user market remains strong, with low vacancy rates and higher rents in both the prime and middle segments.
Residential investment volume increases, but rental stock still declines due to disinvestment activity
Residential investment volume increased significantly in 2024, to over €4.1 billion. Housing was thus the largest sector within the commercial real estate investment market. Although, with a volume of €2 billion, significantly more was invested in new construction than in 2023, however, a large part of the investment volume also consisted of so-called disinvestment portfolios - these rental properties were sold on the private owner-occupied housing market after termination of the lease. On balance, the rental housing stock therefore decreases by about 2,400 homes in the future when these "disinvestment homes" are subtracted from new construction. This is quite apart from the disinvestment activity of smaller private investors.
Outlook for 2025
For 2025, CBRE expects investment volume of €12.5 billion, with the residential investment market remaining the largest segment, followed by the logistics and office markets. The combination of strong fundamentals for rental and value growth and falling policy interest rates will drive real estate investors to capitalize on opportunities. Langens concludes: "The end of write-downs creates a favorable entry point for investors. This year thus marks the start of a new investment cycle within commercial real estate. We expect asset managers to allocate more capital to real estate in 2025, which will boost investment volume."
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 (based on 2024 revenue). The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
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