13 October 2017
The Hague appeal set to continue as investors look outside Amsterdam
According to the report ‘City Special The Hague: Turn of the Tide’ by international real estate advisor Savills, the revitalisation of the city is starting to take shape. Following the government exiting several properties throughout the city, new office developments are providing a strong impetus for the recovery of the Central Business District (New CBD, Bezuidenhout and Beatrixkwartier). In addition, office transformations – mainly to residential – in other parts of the city, are also strengthening the position of the CBD as the prime office location of The Hague.
The agglomeration of The Hague, historically best known for seating the Dutch national government, but also home of corporates like Aegon, Shell, Siemens and PostNL, follows Amsterdam with the second largest office stock in the Netherlands (over 5 million sq m). The area covering the new CBD, Bezuidenhout and Beatrixkwartier amounts to 1.4 million sq m and is the most prestigious office concentration in The Hague. Recent office developments include the Monarch I and II. In addition to new developments, much of the older stock has been recently renovated (Prinsenhof / WTC, Haagse Poort, Terminal 101), which has led to a significant quality improvement.
The effect of various interventions is reflected in the current vacancy rates. For example, the vacancy rate of the Beatrix quarter has fallen from 10% in H1 2016 to 6% at present. In other primary areas, such as the New CBD (7.1%) and Center (8.7%), the vacancy rate has also significantly fallen. The vacancy rate is considerably higher in office locations outside the CBD, for example in Laakhaven (21.1%), Binckhorst (17.4%) and Forepark (29.1%). As many vacant office buildings outside the CBD area are being transformed into residential, Savills expects the strong position of the CBD to increase even further over the coming years.
Investments in The Hague office market have also been increasing in recent years. After the investment volume peak of € 480 million last year, 2017 got off to a good start, with a total investment volume of € 200 million in H1.
Jordy Kleemans, Head of Research at Savills Netherlands, comments: “Noteworthy is that of the total office investment volume of 2016 and H1 2017, 41% was from domestic investors. This is significantly higher than the national average of 33% and the Amsterdam average of 27%. The high vacancy levels due to the disposal of state property have scared off foreign investors in the recent years, leaving room for domestic investors – with more inside information – to capitalise on investment opportunities.”
Clive Pritchard, Head of Country at Savills Netherlands, adds: “As The Hague is currently at the eve of the real estate cycle, following the recovery of the Amsterdam market, we see an increasing interest from foreign investors in The Hague office market. Savills therefore expects cross-border investment volumes to rise in 2017, 2018 leading to a market that will once again – as was the case before the crisis – compete with Amsterdam.”