About one week ago, I wrote the article: Dark clouds ahead for Commercial and Residential Real Estate
The theme of this article was the increasing usage of terrains in The Netherlands for Commercial and Residential Real Estate. This increasing usage is caused by municipalities in order to gain extra income from terrain sales and future taxes. I quote from this article:
And also in other cities and villages this building frenzy for CRE and RRE doesn’t stop yet. Municipalities sell every vacant meter of building ground in order to get direct income and future tax revenues out of it. Project developers and building companies still take the gamble to build this ground full with houses, apartment buildings, business premises and offices, hoping to get a bigger slice of the CRE/RRE pie.
Companies, lured with reduced energy costs, tax breaks, favourable establishment conditions and improved facilities, leave their old office space behind, in order to rent space in new office buildings. The old office space often remains vacant for a long time or even indefinitely
Yesterday, the trend of the aforementioned article was confirmed by the Dutch Central Bureau of Statistics in their report: Urbanization of The Netherlands increases steadily (link in Dutch). Here is an almost integral translation of this report:
is still an agricultural country, if you look at the land utilization. More than half of the territory is used for agricultural and horticultural means. This share, however, is decreasing steadily due to the increasing urbanization. Between 2006 and 2008, the urbanized terrains grew with Netherlands 7000 hectares (17mln acres). That is equal to a city of 120,000 inhabitants.
Of the total surface of The
|Data are courtesy of www.cbs.nl|
Between 2006 and 2008, the urbanization grew to 8.3% from 8.1% of the surface. This concerns new housing zones (
2300 hectares or 5.6 mln acres), as well as new industrialized zones ( 3000 hectares or 7.3 mln acres), together about the surface of (Dutch city with about 120.000 inhabitants). Urbanization of terrain has been increasing steadily for years in The Maastricht and most of this comes at the expense of farmland. Together with new urbanizations comes infrastructure. Roads, railroads and other transport areas increased by Netherlands 1100 hectares (2.7 mln hectares).
In the Dutch province Zuid-Holland the increase of urbanized terrain was the strongest, due to large cities like Rotterdam (+
300 ha) and The Hague (+ 80 ha). The largest surface in new housing zones was also realized in Zuid-Holland. Further, large housing zones are realized at the edges of large cities, like Leidsche Rijn at Utrecht, and next to highways, like Ypenburg near . The new industrialized zones were also mainly realised in Zuid-Holland, among others at the banks of the Maas-river near The Hague (+ Rotterdam 200 ha)
|Net increase of housing zones and |
industrialized zones per province, 2006-2008
Graph is courtesy of http://www.cbs.nl/
- These figures are based on data that was collected before the crisis gained momentum in The Netherlands
- 8% of urbanization doesn’t sound like a lot.
Only now, it seems that the big shakeout in the building and construction industry is going to start. Municipalities are increasingly encountering vacancy (of which 50-60% structural) in their industrialized zones and CRE-projects, meaning that current and future income of these zones will not be as much as initially planned. Also in just developed housing zones, municipalities are encountering problems with vacant houses that are not sold, because the sales price is considered too high.
These are developments that will ultimately disturb the building plans of municipalities. Also these developments can bring project developers and building companies to their knees, as the cash flows from developed housing and industrialized zones will not be sufficient to cover the initial investments. The question is always: who will foot the bill?! The answer is most times: the taxpayer.
And concerning the second bullet: although 8% indeed does not sound like a lot, one should never forget that The Netherlands is already one of the most densely populated countries in the world.
But it is not only the amount of urbanized terrain that counts, it is also the way in which this happens:
Most industrial zones are filled with ugly, cheap and poorly built offices and warehouses, using poor architecture, large surfaces of sheet metal, large glass walls and prefab concrete elements. There is no architectural grand design, no commonly shared building style and the horizon for usage doesn’t seem to exceed 20 years. New industrialized zones appear even if vacancy on nearby industrialized zones is already high: new zones thus cannibalize on older zones, luring away the companies that were established there.
Where the industrialized zones are an architectural mess, the Dutch housing zones on the other hand suffer from a kind of ‘North-Korean’ uniformity, lack of fantasy and beauty and besides that, a lack of usefulness. The latter causes that people are often not really satisfied with their new houses, but took it just, because it fitted them best.
Fortunately, municipalities lose a little bit their hesitance of allowing people to design and build their own houses, lately. But it is still extremely hard to distinguish in which village or city a new housing zone is. You will see the same terraced houses, condo’s and residential houses all over the country, causing cities and villages to lose their often unique look-and-feel.
But to prevent The Netherlands from turning into an ugly country, with ugly cities and villages and ugly industrial zones, it would be good when politics would think about the general look-and-feel of the country in say… 20 years. Unfortunately under the current liberal-conservative cabinet, exactly the opposite happens.