29 Jan 2018 - The Netherlands (The Hague)
I am in The Hague in The Netherlands looking at the residential development market. Arriving at Schiphol on the red eye flight I am quickly into a brisk ‘’wake up walk’’ down the seemingly endless concourses to get through. That being said it is an immensely efficient airport and with my coffee to go I am quickly sitting on board my train to The Hague. Arriving some 40 mins later I wheelie my way to the hotel around the corner from The Hague’s aptly named ‘’Centraal Station’’ and it is not even 10 am.
The sun is shining, and blue sky greets the rented bicycle and me as we navigate the city. Yes, a bicycle is the best mode of transport in this city. It is evident that The Hague retains a charm of the old but very comfortably embraces the new. Whilst the city centre is hustle and bustle with a full complement of restaurants, bars, national and international retailers, it still passionately retains its boutiques, art galleries, statues, historic monuments and royal buildings. There is also a sense of a good quality of life existing here in the city as it is not all built up. The large open spaces, close proximity to the beach, city parks and even a rather large forest in the middle of it confirm an image of a seaside city on the edge of the countryside. The CBD, and in particular the area around the ‘’Centraal station’’ is a hive of development activity with a number of mix used schemes completed or under construction which provides the city with a modern stock of office premises, new retail space, hotels and high-rise apartments.
The demand for housing in the Netherlands is currently very high outstripping supply in both the rental and the sales markets. I explore the residential areas of the city, and it is evident very quickly that there is little in the way of vacant development land for residential development. Local developers are embracing the old and the new and where possible they are converting very large period villas into several luxury apartments (Carnegie Villa apartments and Sophialaan 6) and these city locations attract premium prices, however, this kind of opportunity is dwindling very quickly.
To accommodate the insatiable appetite there are new apartment block developments located in the dock areas of the city where redevelopment is underway or in the surrounding suburbs of The Hague where housing estates are being developed to provide apartments, terraced housing, semi-detached homes and stand-alone villas. Yet despite this the supply is still limited and a number of developers have turned their attention to unlock alternative existing buildings and seek their transformation. For example, several old office buildings that were surplus to demand and a former army barracks are such projects that are being converted into modern luxury apartments and townhouses.
In some notable office conversion projects; the former Shell office complex now known as Project Park Hoog Oostduin and the former office project known as WillemWitsem, a listed office property built in the 1930’s, both have been conceived with the offer of sales and rental apartments to ensure the schemes obtained approval from the local planners. This offering satisfies demand from buyers and renters in a tightening market place.
With such short supply of new developments coming to the market in the short to medium term any new scheme is quickly swamped with interest from buyers. In numerous cases the project is over-subscribed, and this results in developers and their appointed brokers managing ‘’option waiting lists’’ until purchase contracts are signed. The market is buoyed by interest from home owners seeking to move and upgrade, Dutch and foreign investors keen to invest in the buy to let market and where possible albeit more limited, first-time buyers eager to get onto the property ladder. With national banks noting that many buyers are cash buyers rather than seeking mortgages, the sentiment is that a limited development pipeline will result in price rises continuing beyond an original peak forecast of 2018 and more likely to peak in 2020.
Prices for the best quality apartment properties in the most desirable areas of the city, close to the Peace Palace and the surrounding diplomatic areas, within a period renovation, are EUR 8,000 – EUR 9,500 per sqm. Luxury apartments in office conversions close to the World Forum and Parkweg areas are less expensive and are EUR 5,000 – EUR 6,000 per sqm. In quieter but established residential areas close to the Clingendael Institute, prices for new apartments and townhouses are EUR 3,000 – EUR 5,000 and EUR 4,500 – EUR 6,000 per sqm respectively.
Typical Period Property conversion to luxury apartments
Typical Office Building conversion to luxury apartments