THE DUTCH RETAIL PROPERTY MARKET

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1 March 216 Contents 1. take-up 2. supply 3. prices 4. investments STATE OF AFFAIRS THE DUTCH RETAIL PROPERTY MARKET Colophon Composed by Drs. G. Raven Data source NVM Data & Research, Nieuwegein Design PROOF internal & employer branding Photography Phil Nijhuis/ Hollandse Hoogte Even though some of the national retail chains went bankrupt, was undeniably more positive compared to previous years as far as the Dutch property market is concerned. Improved consumer confidence and consumer spending allowed retail property take-up to climb by 2%. Also the amount of retail property available for rent or sale went up by no more than.7%, the lowest rise in years. And, retail stock slightly diminished. More than a million square metres were taken up last year. Indeed more retail space was let and sold, but also more transactions were signed compared to. The majority of our large cities embraced intensifying demand, reporting lower supply levels at last. The investment market too experienced positive changes in. Investments in Dutch retail property reached a record sum of nearly 2.5 billion euros, up 75% compared to. But despite progress, a general recovery did not present itself. In, structural supply levels climbed further and also retail property rents as well selling prices continued to fall in general. Finding new owners and tenants took more time compared to previous years. Uncertainty about the re-letting of retail spaces abandoned by bankrupted large department store V&D, fragile consumer confidence and intensifying internet sales will continue to put the Dutch retail property market under serious pressure in 216. NVM Business is expecting small and medium-sized cities in particular to face increasing vacancy rates

2 1. RETAIL PROPERTY TAKE-UP Take-up on the rise In, total retail property take-up exceeded one million square metres, up 2% compared to. More properties were sold or let out, particularly as average transaction volumes continued to climb. In, the average transaction involved 225 m², yet more than 26 m² a year later. And because of low interest rates and banks more generous funding policy, the number of sales transactions exceeded that of by a quarter. Approximately involved sales transactions, the highest percentage since 28. RETAIL PROPERTY TAKE-UP ACCORDING TO OWNERSHIP 1,2, 1,, 8, 6, 4, Judging by NVM figures, approximately 3,85 sales transactions in total took place in (up 4% compared to ). The number of lease transactions, however, hardly changed compared to. 2, Bron: NVM Letting transactions Sales transactions Just like in previous years, retail property takeup was dominated by clothing and fashion stores, representing approximately 3% in total. International fashion chains (e.g. Primark, H&M) were responsible for the largest transactions. Transactions requiring more time Compared to last year, disposing of retail property required more time in. The average amount of time to let out/sell space went up by 8 days (356 days) and 51 days (454) respectively. Basically, the larger the store in question, the longer it would take to dispose of it. When it comes to large cities (> 1, residents), in general significantly less time was required to find new owners compared to small and medium-sized cities. In, the rental/sales process took approximately 3.5 months less compared to the rest of the Netherlands. The fastest transactions involved retail properties in the city of Amsterdam. RETAIL PROPERTY TAKE-UP BY REGION Amsterdam The Hague Rotterdam Utrecht Enschede Groningen Tilburg Eindhoven Breda Almere Arnhem Haarlem Maastricht 1, 2, 3, 4, 5, 6, 7, 8, Strong demand in large cities In most large cities by far, demand for retail property intensified undeniably compared to. It was most substantial in the Dutch capital, as take-up levels rose more than 5%. Arnhem was one of the few Dutch cities witnessing poorer demand compared to last year. Here, fewer transactions were realised but also, transactions that did take place involved smaller properties. Take-up levels were also significantly lower in the large cities of Zwolle and Apeldoorn compared to. Small and medium-sized cities, on the other hand, presented a varied picture. RETAIL PROPERTY TAKE-UP IN M² BY SIZE CATEGORY 21% 15% 8% 13% 19% NUMBER OF RETAIL PROPERTY TRANSACTIONS BY SIZE CATEGORY 13% 9% 2% 2% 5% 37% 32% 1 m² 1 2 m² 2 3 m² 3 5 m² 5 1, m² 1, 2, m² 2, m² 1 m² 1 2 m² 2 3 m² 3 5 m² 5 1, m² 1, 2, m² 2, m²

3 2. RETAIL PROPERTY SUPPLY Steady supply More retail properties were disposed of but also, supply trends allowed the Dutch retail property market to deliver a relatively good performance in. Due to healthier economic conditions, supply rates were practically steady. By year-end, approximately 2.49 million square metres in total were on offer versus 2.47 million in late ; up no less than.7% (nearly 1% in ). RETAIL PROPERTY SUPPLY ACCORDING TO PROPERTY TYPE 2,5, 2,, 1,5, Measured by the number of stores, in fact supply rates dropped slightly in. According to NVM figures, approximately 7,6 stores were available for rent or sale in late ; around 7,4 by yearend, down 2.5%. 1,, 5, For rent For sale For rent or sale 213 Supply rates dropped in the majority of the Netherlands large cities. In fact very much so in the city of Breda. The amount of retail space available went down by 25% compared to last year. By cancelling the new development project known as Achter de Lange Stallen (approx. 19, m² of retail space), those interested opted for existing stock instead; which was good news as far existing supply was concerned. Supply levels also went up in the cities of Almere, Tilburg, Eindhoven and Maastricht. The main reason is that a considerable amount of retail space outside the city centres was added to the market, whereby peripheral as well as large-scale retail trade establishments were involved in the first place. With the exception of Almere, supply levels remained steady in all city centres. Structural supply still on the rise Supply hardly changed, however the amount of structural retail property on offer continued to rise in. The amount of space available for more than three years increased by 6% up to 43, square metres. In late, 14% was referred to as structural supply; 16% a year later. Just like in previous years, it was mainly Drenthe, Friesland and Zeeland experiencing high structural supply levels. Small municipalities outside Randstad in particular were home to retail properties that had been on the market for a very long time. Large cities, on the other hand, were relatively less affected because of greater market dynamics, although there have been a few exceptions. In Leeuwarden as well as Enschede, more than a quarter of vacant stores had been available for more than three years. RETAIL PROPERTY SUPPLY BY REGION Rotterdam Enschede The Hague Arnhem Amsterdam Eindhoven Groningen Haarlem Maastricht 16% Almere Tilburg Utrecht Breda 22% 1, 2, 3, 4, 5, 6, 7, 8, 17% 1 m² 1 2 m² 2 3 m² 4% 15% 14% 3 5 m² 5 1, m² 1, 2, m² 2, m² RETAIL PROPERTY SUPPLY IN M² BY SIZE CATEGORY NUMBER OF RETAIL PROPER- TIES ON OFFER BY SIZE CATEGORY END OF 17% 9% 4% 1 m² 1 2 m² 2 3 m² 2% 21% 35% 3 5 m² 5 1, m² 1, 2, m² 2, m²

4 3. RETAIL PROPERTY PRICES Rents In, retail property rents were once again under pressure, going further down in general. According to figures presented by NVM, rents dropped by approxi mately 3% compared to last year. However, on average the difference between the asking price and transaction prices realised was almost the same. RENTS OF RETAIL PROPERTY per m²/jaar 2 15 In the median rent went down to 144 per m² (: 149), which means prices had dropped more significantly than last year. The main shopping streets in most of the Netherlands large cities managed to escape, although prices in B and C segments were under a serious amount of pressure A common complaint on this property market was that rents are excessive. Interestingly, transaction prices did go down in general in, however the average asking price climbed according to NVM data. Which is at odds with the request presented by retailers and retail chains, addressing property owners to intervene. Because many stores went bankrupt in and again in, and because property owners were afraid their lessees might give up on them, they could not but agree to lower their prices, up to 3% in some cases. Purchase prices Despite intensifying demand for property for sale, the average selling price continued to fall, down 7% compared to. It means prices had dropped more significantly than a year before, although on average the difference between the asking price and selling price was 13% lower set against the lowest asking price (: 16%) % Winkelruimte PURCHASE PRICE MOVEMENTS OF THE RETAIL PROPERTY MARKET Price movements on the retail property market, year to year, owner-occupier properties

5 4. RETAIL PROPERTY INVESTMENTS Higher investment volumes Due to low interest rates and more availability of capital, a record sum was invested in Dutch retail property in. Investment volumes reached nearly 2.5 billion euros, up a comfortable 75% compared to. The main reason is that many retail portfolios were taken over by foreign investors. For instance, the German PATRIZIA took over a 1-store portfolio at approximately 294 million euros. Most stores are to be found on prime locations. Yet another major transaction involved the sales of the entire Dutch retail portfolio owned by Delta Lloyd Vastgoed to a fund of the British Tristan Capital Partners. This portfolio existed of 15 shop ping centres as well as commercial properties, changing owner at 273 million euros. RETAIL PROPERTY INVESTMENTS ACCORDING TO PROPERTY TYPE x million 2,5 2, 1,5 1, Shopping centre Compared to previous years, investors were also more interested in supermarkets. These are Dutch investors in all cases. Owing to its relatively modest investment volume, this property category is not quite appealing to as far as foreign investors are concerned. RETAIL PROPERTY INVESTMENTS BY REGION 9% RETAIL PROPERTY INVESTMENTS BY SIZE CATEGORY Gross initial yields down Because many owners are reluctant to reveal their initial yields, price trends on rental retail property market presented something of a challenge. According to NVM data, however, gross initial yields were at the same level compared to, although limited transactions were involved and usually they concerned stores located outside the main shopping areas. Gross initial yields for these properties were on average 11% in. 23% Central North East East 32% 21% 5% 1% West North West South South 53% 5 m² 5 2,5 m² 2,5 5, m² 13% 27% 4% 3% 5, 1, m² 1, m² For top-notch locations in our country s large cities, yields were considerably lower, going down in. Gross initial yields paid for prime locations amounted to approximately 4%. One example is the acquisition of a fully redeveloped retail property on Kalverstraat/ Rokin in Amsterdam by Vastned.

6 DEFINITIONS A spatial and independent unit accessible to the public, used by end consumers for the greater part to display and offer items that are not used on the spot. Retail trade must be involved. Generally speaking, retail trade can be categorised as follows: food and stimulants (food) as well as sustainable and other (non-food) items. Take-up Lease and sales transactions concluded on the open market. Users providing for their own accommodation requirements (the so-called owner-occupier development) are not included in take-up volumes. The same applies to sale-and-leaseback agreements as well as contract extensions. Since, NVM has been registering transactions of members and non-members with retrospective effect. Hence, take-up figures are inconsistent with those presented in previous editions. Supply immediately available for rent or sale. Supply does not include outlets under construction and those yet to be built. Supply includes vacant and developing outlets as well as spaces that are still being used but which are to be released in the near future. Vacancy Involves the total physically vacant retail properties. Vacancy is usually less than supply. Rent The basic rent paid per square metre of lettable floor area, exclusive of Dutch VAT. Gross initial yield The gross annual rent upon acquisition as a percentage of the total investment.