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Dear readers,
As interest rates are expected to remain low, there seem to be few suitable alternatives to real estate investments – in spite of significantly falling returns. Sentiment is positive, and demand remains enormous for all types of real estate, even though it is becoming more and more difficult to find real estate investments at reasonable prices. But in view of the significant price increases, how likely is it that there will be further leeway for real estate yields to continue falling? Even though it seems like anything could happen during the current real estate cycle, there are indeed some initial investors who are growing cautious in light of the level that has been reached and who are increasingly taking a wait-and-see attitude. Although real estate yields have not yet bottomed out, we are very close to seeing that happen.
Wouter de Bever
Contact
Mr Wouter de Bever
Managing Director Netherlands
Phone: +31 20 691 45 51
E-mail: Wouter.de.Bever@Deutsche-Hypo.de
Following consistently negative quarter-on-quarter development since the beginning of 2018, the Dutch real estate sector saw its first glimmer of hope in the third quarter 2019: with a 1.5 % rise to 192.0 points, it achieved the most positive change among all European countries surveyed.
All input variables contributed to this turnaround. The AEX 25 leading stock market index has seen generally positive development since early 2019, with growth of 3.3 % in the third quarter contributing significantly to the positive results of the Dutch REECOX. The months of July (+1.8 %) and September (+3.9 %) sent positive signals, while August (-2.4 %) saw slightly muted development. Overall, the index reached a new peak at 580.2 points, last surpassed only in May 2001. The FTSE EPRA/NAREIT Netherlands real estate share index also saw overall positive development, even though July (-7.9 %) and August (-1.3 %) still had negative signs. September’s rise of 11.5 % marked a clear turning point, however, resulting in a positive overall quarterly trend of +1.4 % to 823.8 points. The prolonged deterioration in business sentiment as recorded by the Economic Sentiment Indicator (ESI) also appears to have come to an end. After an approximately year-long period of decline, it is climbing once again with a quarter-on-quarter rise of 1.8 % to its current level of 104.1 points.
Country | Stock Index | Real Estate Economy Index | Economic Indicator | Base Interest Rate | Interest Rate 10-Year Government Bonds | Q2-19 | 07/19 | 08/19 | Q3-19 | Delta (%) Q2-19 / Q3-19 |
|---|---|---|---|---|---|---|---|---|---|---|
DE | eq | up | do | eq | do | 296.6 | 296.2 | 295.4 | 295.6 | -0.3 |
GB | eq | up | dodo | eq | do | 198.9 | 198.6 | 192.7 | 189.5 | -4.7 |
PL | do | up | eq | eq | dodo | 186.8 | 186.5 | 184.9 | 185.0 | -1.0 |
NL | up | up | up | eq | dodo | 188.4 | 189.8 | 189.0 | 192.0 | 1.9 |
FR | up | up | eq | eq | dodo | 231.8 | 232.1 | 232.8 | 234.7 | 1.3 |
ES | eq | up | eq | eq | dodo | 198.0 | 198.6 | 199.8 | 199.0 | 0.5 |
