Real Estate Market Outlook 2023

The real estate market in the Netherlands, historically cemented as a barometer of its economy, has shown impressive activity levels over the past two years.
Netherlands Real Estate and Construction
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Marjolein van Bekhoven and Lars van Esveld of Loyens & Loeff discuss the outlook for the Dutch real estate market in 2023 – a barometer of the country's economic activity.

Economic Developments (2020 – 2022)

The real estate market in the Netherlands, historically cemented as a barometer of its economy, has shown impressive activity levels over the past two years. Cheap, abundant debt, monetary stimuli and fiscal relief measures under the COVID-19 climate pushed investment volumes to EUR17.9 billion in 2020 and EUR17.3 billion in 2021, CBRE has reported. In comparison, the all-record, pre-COVID year 2019 amounted to EUR21.6 billion.

In the pandemic's wake, however, the conflict in Ukraine has sent economic shockwaves through the world. Soaring inflation, decreased money supply and sharply increased interest rates have caused market volatility and investment has paused. Consequently, 2022's real estate investment volumes in the Netherlands decreased, but nevertheless amounted to EUR16.4 billion, still well above the simmering years following the financial crisis (eg, in 2016, some EUR14.8 billion). This indicates a decline of only 5% (2022 versus 2021). Although deals were adjourned or aborted, 2022 overall remained a thriving transaction year – eg,'s sale and leaseback of its Amsterdam headquarters for EUR566.3 million.

2023: Real Estate Outlook

Naturally, as the free money era has drawn to a close, the Dutch real estate market has been off to a relatively quiet start. Market participants are currently seen digesting the return of interest rates to historically more normal levels – in the years prior to the 2007/2008 financial crisis, ECB-policy rates fluctuated between 1% and 4%. Consequently, property valuations and property asking prices are being scrutinised. The market is slowly shifting from a seller's paradise to a purchaser's reality.

2023 investment volumes are expected to be between EUR13.3 and EUR13.7 billion; a decline of between 16% and 19% (2023 versus 2022).

2023 will be a different year for the Dutch real estate market. This does not mean opportunities are absent. In fact, resurgence is already showing, with a new (price) equilibrium expected to be reached in 2023's third quarter. This could mark the start of a new economic cycle with a healthier balance between asking price versus demand, and between interest rates versus returns.

Expected Real Estate Developments in 2023 and Beyond

Meanwhile, market participants are rightly seen giving attention to various long-term developments that will affect the (near) future of property investments and development in the Netherlands.

Sustainability is key

Spurred by climate change and volatile energy prices, one interesting development across all real estate sectors is the quest for sustainability. Quality certifications alone (eg, BREEAM certification) are no longer unique. Recently, Brussels stepped up its sustainability game through extensive new (ESG) regulations (eg, CSRD and SFDR as part of the EU Taxonomy, as well as EPBD). This pursuit also becomes more prominent nationally – eg, through the minimum C-level energy certificate requirement for Dutch office buildings as per January 1st, as well as through new sustainable-conscious lease contract standards for commercial spaces.

This wide commitment to sustainability will lead to greater market differentiation, which can be characterised as both black-and-white ("sustainable" versus "non-sustainable"), as well as grey (how sustainable – according to Articles 8 and 9 of the EU Taxonomy). Most real estate investors and developers will find themselves going above and beyond to meet stringent sustainability/ESG criteria in a bid to satisfy both the investment and occupier market. As interest in "non-sustainable" real estate starts to wane, however, investment opportunities will emerge for market participants less keen on sustainability or simply looking for a property bargain with renovation opportunity. Further, it will take time and practice to translate ESG criteria into concrete standards and measures.

In any case, capital will increasingly shift towards A-quality properties rather sooner than later – not only because of Brussels, but because the market simply demands it.

Less interest in Dutch residential properties

A second interesting development is taking place in the Dutch residential market. In a bid to face the current housing shortage, the Dutch government pledged to realise 900,000 newly built homes by 2030. As promising as that may sound, however, property investors and developers are poised to lose interest in the Dutch residential market. This is mainly due to uncertainty and dissatisfaction over proposed changes to tax legislation (see below) and governmental regulations – eg, new rent regulations which will heavily control the rental market, likely as of 2024.

Meanwhile, the number of elderly people, as well as the longevity of their lives, increases. Property investors and developers turning away from the regular residential market can find plenty opportunity there: the demand for elderly care and healthcare real estate steadily grows. By way of perspective – 435,000 new elderly homes must be realised by 2050.

Proposed changes to tax legislation

While looking for opportunities, real estate investors – including those eyeing residential properties – must take careful consideration of proposed tax changes – eg:

  • likely as of 2024: 10.4% RETT levy on share deals with target companies owning newly built real estate, eliminating a key driver for choosing share deals over asset deals; and
  • likely as of 2025:
    • tightened interest deductibility under the "Earning Stripping" rules for real estate leased to third parties by eliminating the EUR1 million threshold; and
    • abolishment of the Dutch real estate investment trust (REIT) regime.

Increased creativity, flexibility and co-operation required

Although investment and development opportunities remain plentiful, in view of the tax considerations above, they increasingly require creativity and flexibility, as well as the enhanced co-operation of all parties involved. For developers, this will be ever more prominent in times when land on which to build becomes scarcer and municipalities and court rulings further limit building potential (eg, on building height, nitrogen disposition). From a financing and investment perspective, this does give an edge to non-traditional, more alternative market participants ready to leverage their financing and/or investment creativity – eg, through debt funds.

In any event, law and tax firms alike will be in increased demand for their joint expert knowledge, as it is the combination of developments that require careful navigation.


All in all, 2023 will be a challenging year for the Dutch real estate market. The outlook is positive and promising as the equilibrium in the market restores. Market participants will be keen to pursue new opportunities, keeping sustainability top of mind. Meanwhile, they must carefully assess long-term developments alongside their trusted legal (tax) advisors.

Originally published by Chambers and Partners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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