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Report of the Board of Directors


Economy may boost demand for office space

The recovery of the Dutch economy firmed up in 2016 and according to forecasts is set to book steady growth of 1.5% to 2% in the years ahead. On top of this, unemployment continues to fall and consumer confidence is returning to pre-crisis levels. All of these trends are likely to have a positive impact on business activity and growth, which will in turn further increase quantitative demand for office space in the best locations in the main cities of the Netherlands. We do expect to see a continuation of the polarisation in the office market in 2017 and beyond, as secondary locations suffer the most from the growing surplus in office space. On a brighter note, we are seeing an increasing willingness in both the public and private sectors to consider the conversion of surplus office space to other uses, such as residential accommodation or hotels. This may help to reduce office vacancies in the long term.

Building value

Pressure on the investment market has already led to a decrease of yields, especially in Amsterdam. A continuing rise of office real estate prices is expected to continue to rise in 2017, although at a lower rate than in 2016. Since some yields in Amsterdam are sometimes below the lowest level of 2007, investments in other Dutch cities could become more attractive for investors. While private equity buyers have entered the market in recent years, new foreign investors may enter the office real estate investment market in the coming years. Several Asian investors have already concluded a number of major transactions.

Pipeline projects such as Hourglass and The Olympics in Amsterdam will benefit from these developments. They ensure the growth of the Fund for the next few years. But the Fund is also aiming for new acquisitions with a focus on Amsterdam and Utrecht to further diversify the Fund's regional exposure.

Rental growth on the horizon

At the same time, the occupier market is improving. Once again this is most visible in Amsterdam, where occupancy rates are rising quickly, scarcity has returned in the best locations and rent levels are increasing. Assets do require modern standards to take advantage of these developments. This is why the Fund will continue to enhance its core assets. An investment plan for WTC Rotterdam will improve the asset's attractiveness through the creation of new functions and facilities, such as sport and food and beverage, improved accessibility and modern interior design. Advanced technology enables the Fund to support its tenants by providing customer aimed and user-friendly services. But it is not just innovations within the assets that are important. The Fund also recognises the need to cooperate with and develop (new) platforms so it can offer facilities and services available in buildings to new and existing tenants.  

The motto for The Olympic Amsterdam is “Aim higher”. The challenge is to create a vibrant new part of Amsterdam, where a community of tenants, visitors and residents work, play and live. In addition to the planning and leasing of units in the assets to tenants in a variety is business sectors, the Fund is also actively cooperating with the Amsterdam city council and other stakeholders to improve public areas. Completion is foreseen for early 2018, so the majority of the redevelopment will take place in 2017.

The Fund aims high for every asset. Active asset management will lead to a wide range of activities with the ultimate goal of increasing occupancy rates. This will enable the Fund to realise sustainable outperformance.

Amsterdam, 20 March 2017

Bouwinvest Real Estate Investment Management B.V.

Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments

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