Sick building syndrome

Read in Het Parool of 7 October 2015:

Foreign investors are buying pied-a-terres, luxury shopping malls, dwellings, office space on a big scale in Amsterdam. The financial crisis seems to be passé. Buying real estate is becoming more and more attractive. The mayor of Amsterdam wants a real estate fund that will finance the buying of dwellings in the city centre in order to prevent rich foreigners to become the property owners and prevent overheating. He hopes to discourage global market forces and counteract buying and selling of dwellings like in London, Paris and New York. End of this month, 30 November 2015, an edition of ‘Stadsleven’ (Urban Life) at De Balie in Amsterdam will be dedicated to ‘Big spenders’. Tracy Metz has invited guests to speak about buying and selling real estate in Amsterdam. Is it risky? Should we stop it? Or is it just great? Tracy asked me to write a piece on the subject for her website, which I did, of course. Then I read – a bit too late – the Amsterdam based newspaper Het Parool of 7 October. It said that real estate prices in Amsterdam are booming, while in the rest of the country they are stable. Prospects are unvaryingly detrimental. Detrimental?

In one of the reports on this issue, De Nederlandsche Bank points at the fact that rents in the Netherlands have stabilized as well, even in Amsterdam. That means returns on investments can only drop in the future. For new contracts renters will ask for lower rents because the vacancy rate in the Netherlands is far too high. The national bank is convinced that the situation on the Dutch real estate market will aggravate. “The capacity of office space is dropping, from 16 m2 per person now to 14 m2 in 2030. And internet shopping will steeply rise form 10 per cent now to 25 per cent in 2030, but it could also be 40 per cent.” Forty per cent? Too bad. Conclusion: in the rest of the country there has been a massive overproduction of real estate in the past, while in Amsterdam, where demand is high, overcapacity elsewhere hinders new building projects. Worse even, owners of real estate in Amsterdam who have paid the highest prices, will be confronted with the lowest returns on their investment. Something really to worry about.