Amid high vacancy rates in the commercial property market of Netherlands, the Dutch have finally found a way to fill up the empty buildings. A number of property developers are refurbishing office space to convert them into student boarding or housing facilities, according to several media reports.
In March, a report by Commercial Briefing stated that though office demand remained firm in the four core markets of Randstad, vacancy rates were still high. In another recent report it was found that the total vacancy rate in Netherlands was around 27 percent, which is a lot higher than the anticipated 15 percent. Apparently huge spaces have been rented but are not being used.
To fill these spaces up, tenants and builders are trying to shift the focus to student housing, a popular real estate agenda for builders. With college enrollments expected to rise by as much as 15.7 percent, demand for student accommodation has risen in the area. Meanwhile, the supply has been very limited over the years. Therefore, converting office spaces seems to be a perfect solution to diminish the vacancy rates, reports Property Wire.
According to Property Guru, five office buildings in the town of Diemen are all set to be redeveloped into a student campus that could host 534 students. It is slated to be completed by September 2013. Another 402 units are expected to be ready by the start of 2014.
A former office building, Rembrandtparkgebouw in west Amsterdam was also converted into a high school and a 128 unit student lodging apartment.
Experts believe that this trend could lessen the negative conditions in both the office and student housing market.
"The redevelopment of former office buildings into student housing accommodation is helping to alleviate a problem in both markets. With growing demand for student accommodation in the Netherlands against a shortage of supply the sector is becoming increasingly attractive to both domestic and international investors," Jeroen Jansen, head of research at Savills, a global property firm based in Netherlands, said in a statement. "Banks are more and more willing to finance this sort of property and achievable yields are in the region of 6.0% and 7.0% depending on location,"
However, they also believe that to take complete advantage of the trend, the government must loosen its grip on some of the stringent rental rules.
"Interest in student housing is notably growing, however we believe that for this sector to graduate from niche to a main asset class in the Netherlands the current government regulations need to be adjusted to allow for a fully commercial operation of student housing alongside the regulated segment. This way the undersupply can be addressed more quickly and domestic and international students will be able to choose from a variety of suppliers from budget to high end," Jan de Quay, investment director at Savills Netherlands, added in the statement.
The global demand for student housing is on the rise as well. Want to know how to find a home while studying abroad?
Check some tips out, here.
