The shortage of housing in the Netherlands is a known fact. And there are no simple solutions to this complicated issue. Many people think that the easiest solution to solve this shortage is to build more houses (fast). However, this proves to be an impossible task, most of all because of the increasing scarcity of suitable building lots.
The current housing market figures
The NVM [Dutch Association for Real Estate Agents] publishes quarterly figures about the housing market. The reports covering the past periods show a continuous decrease in the number of new-build houses. The figures for new-build housing are still lagging whereas the number of listed (existing) houses increased. To illustrate this: only 5000 houses were sold during the second quarter of 2022, which is a drop of 48% compared to the same period last year. The number of available houses also decreased by 17% while the average selling price for new-build houses increased by 12%. This clearly shows that, at some point, we may well be running out of new-build houses. The number of sold new-build houses has never been this low since the credit crunch of 2011. That doesn’t mean that there is no demand for new-build houses. The shortage remains unsolved, however, because both the project developers and the buyers remain reticent, and the main causes for this are the sharply increased mortgage interest and the high construction costs.
And let’s not forget the shortage of suitable building lots.
Shortage of land inhibits further developments
Cobouw (an independent news source for the construction industry) already published an article about the increasing strain on available building lots some time ago. The current situation makes it impossible for construction companies to build sufficient affordable houses, and the above-mentioned figures provided by the NVM confirm this. They would still be able to build houses in the higher price ranges, but only at the risk that the supply will no longer be in line with the housing demand.
The shortage of land has led to a rapid surge in prices. Large amounts are paid for locations that may not even be granted building permits for new housing.
Many municipalities would like to develop new-build projects within their borders, but the scarcity of land will inevitably lead to allocating building lots on the outskirts of towns and villages. At the same time, municipalities, provinces and the government take forever to come to any decisions about this.
Moreover, the shortage of suitable land can also be felt in the business market. NVM Business recently published new figures about the commercial real estate market.
The commercial real estate market
Over the past years, favourable economic developments created a higher demand for commercial properties, with an increase in the sale of this type of real estate of 14% last year compared to 2020. Whatever commercial property came on the market, most of them sold like hot buns even though more of such properties became available. And as this sector faces the same shortage of building lots, not enough new properties are being built.
An additional problem the commercial real estate sector is coping with is the lack of capacity on the power grid, which is another factor hampering further developments.
More building lots – is that the solution?
The reports mentioned before illustrate that scarcity is high for both the housing market and commercial real estate, and that these problems are not easily solved. Although many municipalities and provinces would like to realise as many new-build projects within the current municipal borders as possible, this sole effort will not solve the shortages in practice. They will look for new locations for housing as well as commercial properties, and this makes land investments an appealing option for investors. The current market not only ensures that such investments maintain their value but also offer high returns. This article offers more reasons why land investments are a smart option.
Are you interested in exploring your options? We gladly invite you to make a non-committal appointment with one of our advisers.
Buying land in Amsterdam is nigh impossible as it is owned by the Amsterdam municipality, which rents out this land to property owners based on leasehold constructions. The price owners have to pay as ground lease differs per location. In fact, there are only two locations in Amsterdam where land can be sold to private buyers.
Why does Amsterdam own (almost) all the land?
Amsterdam owns about 80 per cent of all the land within the municipal borders. In 1896, the Amsterdam municipality decided to maintain ownership of the land allocated for new-build projects and lease the land to homeowners at an annual fee. This is based on a leasehold construction to ensure that, when a tenant dies, the leasehold right can be transferred to the heirs. A leasehold right allows the user to use or maintain the piece of land while this remains the property of another party. The decision was based on the idea that not just homeowners but all Amsterdam residents would benefit from increasing values within an area.
The costs involved in leasing land in Amsterdam
Leasehold rights in Amsterdam require the payment of an annual fee to the municipality, which is called the ‘ground lease’. Tenants can also buy off the ground lease for several decades or into perpetuity. These settlement amounts vary per location. To give an example: buying off a leasehold in perpetuity in Amsterdam-Zuidoost will cost around 2,500 euros while doing this for an equivalent apartment in the Jordaan area will easily cost 40,000 euros. The settlement amounts are highest in the city centre and Amsterdam-Zuid.
Where can you buy land in Amsterdam?
The only privately owned land, also called freehold land, is the land along the Amsterdam canals and around the Vondelpark – which roughly means the built-up area up to 1896. Apart from that, the land in the Nieuwendam area is also privately owned. The zoning plan shows that this land is allocated for agricultural use, however, thanks to its strategic position and the dominant role of the municipality and real estate companies within this zone, combined with the high demand for new housing, the allocation may well change to building land. The Amsterdam municipality shares this vision as well. This shows, for example, in the Amsterdam Structural Vision describing that the North/South metro line is to be extended to this area.
How to buy land in Amsterdam?
It is not possible to buy land directly from the Amsterdam municipality. The only opportunity to buy land in Amsterdam is when it is sold by a private owner or an organisation.
