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Netherlands - Q1 2018

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Netherlands - Q1 2018

The Dutch economy has been growing for 14 consecutive quarters and reached a GDP growth of 3.0% YoY in Q3 2017.

It outperforms the European’s average GDP growth (+2.5%) and the growth of adjacent countries like Germany (+2.8%), United Kingdom (+1.5%), Belgium (+1.7%) and France (+2.2%).

Other fundamentals show similar economic improvements. Unemployment stands at 4.5%, household consumption is up 2.5%, private investments have risen to 7.8% and exports increased by 6.0%. Both producer and consumer confidence stand positive with +13.4 and +26 respectively which is the highest level since the crisis and even better than 2007.

The CPB (‘Centraal Plan Bureau’, a governmental institute that sets up economic forecasts) expects the Dutch economy to further restore to pre-crisis levels. However, current growth is more sustainable than before the crisis in 2008 due to the stronger fundamentals which indicate a controlled growth.

One example is the moderate level of inflation; a healthy economic growth maintains an inflation of approximately 2%. Exceeding this level means an unhealthy and unsustainable growth which is usually followed up by a recession. The graph below presents this recurrent pattern and shows the healthy inflation level during the course of 2017. Another fundamental that is beneficial to the Dutch economy is the yield gap between Dutch real estate and long-term interest rates in the EU which makes the Netherlands an interesting destination for foreign capital.

These strong fundamentals and stable economic climate are the key drivers of the ongoing popularity of Dutch commercial real estate, leading to another record-breaking year in 2017.

Source : Savills

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