a.s.r. real estate

ASR DPRF: retail investments which are attractive and secure in the late economic cycle

Over the past few years, Dutch real estate has moved from being a laggard within the EU-28 to a front-runner in terms of total return and capital growth (INREV, 2019). The Dutch housing market was particularly badly affected in 2008-2013, due to conservative fiscal policy, austerity and the high loan-to-value of many private households. This slowdown extended to the commercial real estate market (a.s.r. real estate, 2017). At the same time, the retail sector was affected by lower spending power, and office values slumped due to falling demand and structural oversupply. However, all this is now firmly in the past, with rising residential values and rents, and promising inflation figures helping to boost the market. Since its re-emergence, the Dutch retail real estate sector has been providing an attractive long-term inflation hedge, with inflation-linked contracts and a structural scarcity of retail outlets (IVBN, 2016). The retail investment market benefits from the Netherlands’ strict planning policies, which mean fewer out-of-town shopping schemes and more inner-city shopping facilities than most other EU countries.

Although the Dutch retail market is not immune to e-commerce, the country was an early participant in the online game due to the high penetration rate of internet, a solid logistics network for next-day deliveries and key domestic online players. This, in turn, has meant that the Netherlands is a leader in terms of online consumption. The years following 2013 meant that retailers that were unable to adapt and develop went out of business and retail outlets were redeveloped into residential or other, resulting in a decrease of approx. 2m square meters of retail space (a.s.r. real estate, 2018). The solid demographics that underlie the Dutch real estate market, such as household growth, population growth and increasing spending power, are now spilling over into commercial real estate. If approached in the right way, investing in Dutch retail will continue to be an attractive option in the years to come, benefiting from the same fundamentals as residential developments, but with less capital competition and a dichotomy between winning and losing retail locations. This makes core retail products attractive, since retail is less vulnerable to new developments. The ASR Dutch Prime Retail Fund, as one of the most core vehicles in Europe, is able to invest in this sector in a secure manner.

As discussed last year, the ASR Dutch Prime Retail Fund is witnessing a trend away from traditional retailers and towards food & beverage retailers, as well as city-centre services. Food-oriented retailers are adopting the wider global trends of out-of-home eating, the experience economy and the democratisation of tourism. These trends are especially profound in urban settings, benefitting the ‘G4 cities’: Amsterdam, Utrecht, Rotterdam and The Hague. The Fund is therefore profiting from ongoing urbanisation, tourism, an increase in single-person households and the rediscovered attractiveness of city centres as the ‘living room’ of urban areas. On 8 November 2018, the Manager held a seminar on food retail for a.s.r. real estate employees, third-party advisers and food-oriented retailers, at which the Manager discussed how cities are being transformed by these out-of-home eateries and other macro-trends. The presentation of multiple perspectives of both food retailers and conceptual thinkers provided a vision of how food-retail will transform the Dutch retail real estate landscape and our cherished city centres.

This year, the Fund will provide our investors with economic insight in the key urban locations where future economic activity will take place and which will attract the post-materialistic consumers of tomorrow. For more information on the ASR Dutch Prime Retail Fund and its strategy, please contact Luc Toren.

Luc Toren
fund manager
ASR Dutch Prime Retail Fund
M: +31 (0)6 53 31 16 80
E: luc.toren@asr.nl