How to invest in commercial real estate in the Netherlands

01-06-2024
Key issues include financing of acquisitions, responsibilities and liabilities associated with owning commercial real estate assets, as well as an overview of the latest ESG regulations to be taken into account. Certain issues to be considered post-acquisition are important for the buyer to be aware of. We have therefore outlined some of the responsibilities and liabilities that come with ownership and the way that buildings are managed.

CMS is highly experienced and competent to advise in all phases of a commercial real estate acquisition, including post-acquisition acquisition aspects of a real estate transaction.

The Dutch real estate market at first glance

The Dutch commercial real estate market continues to attract foreign investment. Emphasis on sustainability and ESG makes the Netherlands an attractive market for commercial real estate investors.

After a difficult start in the beginning of 2024, the hope for revival of the Dutch investment market exists, with macroeconomic stability as a prerequisite. According to Savills, investors view the Netherlands as the 5th most favourable European country to invest in, behind the UK, Germany, France and Spain. It confirms the position of the Netherlands as one of the most important real estate markets in Europe and the Middle East. Over the next 12 months, investors expect that most transactions will take place in the EUR 0 – EUR 100 million category. High (re)financing costs are expected to remain a barrier for larger transactions. A recent CBRE study shows that the occupier markets in the Netherlands are still struggling with scarcity. As a result, only a limited decline in demand can be expected, as well as ongoing growth of both market rents and contract rents, thanks to a historically high indexation. This shows there is still interest in the Dutch real estate market, albeit at a different price level.

The market for commercial real estate in the Netherlands is viewed as a stable and growing market, with a high demand for modern and sustainable properties we expect ESG to become one of the most important factors in investment and investment decisions. Furthermore, refinancing may lead to significantly higher interest costs, which can influence the decision whether or not to dispose real estate.

Issues around refinancing and access to affordable debt are likely to remain pressing in 2024. Probable consequences include an increase in the forced sales of property, more businesses searching for additional equity, and a growth in the number of owners in distress. The current investment climate may also prove to be a fertile one for nontraditional lenders. The continuing uncertainty in the sector could lead to a higher cost of capital for the traditional bank lenders, which would increase margins and – when added to a lower risk appetite – may provide an opportunity for alternative lenders. We have also noticed that alternative lenders’ speed of execution gives them an advantage over banks in certain circumstances. The Dutch commercial real estate market continues to attract foreign investment. Emphasis on sustainability and ESG makes the Netherlands an attractive market for commercial real estate investors.