City Special / Den Haag October 2017

TURN OF THE TIDE October 2017 Contents

CONTENTS

METROPOLITAN AREA page 4

ABOUT THE HAGUE page 6

CENTRAL BUSINESS DISTRICT page 8

OCCUPIER MARKET page 10

INVESTMENT MARKET page 12

TURN OF THE TIDE page 13

This publication This document was published in October 2017. The data used in the charts and tables is the latest available at the time of going to press. Sources are included for all the charts. We have used a standard set of notes and abbreviations throughout the document.

3 The Hague Special October 2017

Metropolitan Area - The Randstad The Hague is situated on the coast Both airports in the Randstad are FIGURE 1 and houses the Dutch government growing. In 2016 the number of Randstad polycentric structure and parliament as well as numerous travellers served by Schiphol airport international public bodies. grew by 9.1% to almost 64 million , which has the largest port and additionally 1.7 million tonnes in Europe, is an international centre of cargo were handled. This makes of transport and industry. Amsterdam Schiphol the fifth largest airport has become the commercial and in Europe in terms of passengers financial centre and is the most and the third largest in terms of important tourist attraction among cargo volume. Rotterdam The the four cities. Utrecht is not only a Hague Airport is situated right at national road and railway hub, but the northern edge of the city of The Hague is an important part At European and global level it is also the location for a large number Rotterdam and about 20 kilometres not so much individual countries of IT companies. The Randstad southeast of the city centre of AMSTERDAM of the Randstad conurbation, that compete with one another, but is home to many of the top Dutch The Hague. The airport welcomed This part of the which houses almost half of the rather major urban regions. The city industries, including manufacturing, 1.7 million travellers in 2016, a of The Hague is part of the greater chemicals, logistics, water, energy, substantial 70% increase since equates the size UTRECHT Dutch population. If the region metropolitan area called Randstad, life science and the creative industry. 2009. The Masterplan for this airport of the greater THE HAGUE home to 7.8 million inhabitants The national government actively foresees further growth towards 2.4 London area were represented as a single ROTTERDAM and compromising Amsterdam, supports developments in these top million passengers annually. metropolitan area, it would come Rotterdam, The Hague, Utrecht and knowledge-intensive sectors as they third in Europe after London and several smaller cities. ‘Het Groene can make a substantial contribution Hart’, a large agricultural and leisure to solutions to global social problems Paris. area protected by the government, as well as offer plenty of opportunities forms the green heart of this area. for exports to the global market.

What makes the Randstad special The excellent infrastructure in the is the polycentric structure and the Randstad sets itself apart from built-in flexibility that comes with other metropoles. It has a very good 18% it. Where other metropolitan cities motorway network, fast railway have a relative small city centre and connections, two airports and two large suburban area, the Randstad harbours. By train it takes less than consists of city-hubs, each with a one hour to travel from The Hague to FIGURE 2 complementary focus. Amsterdam or Utrecht and even less Top sectors Concentrated in the Randstad than 30 minutes to Schiphol Airport. AGRI & FOODS CULTURE CHEMICALS MANUFACTURING

5%

BRAINPORT SERVICES LIFE SCIENCES & HEALTH HORTICULTURE

5%

WATER ENERGY LOGISTICS CREATIVE SERVICES

Schouwburgplein (Ossip van Duivenbode, 2014) 5% PBL, 2014

4 5 The Hague Special October 2017

About The Hague Tourism The Hague is a major destination Savills identified 18,000 dwellings The Hague houses seven different for both foreign and Dutch tourists. being constructed now or are higher educational institutions. Ambition of municipality to realise This is due to a lively city centre and in pipeline. The largest projects Together they offer courses to must-see visits such as the concern the 800 dwellings along 28,560 students currently, which (where the Dutch government is the Trekvliet in De Binckhorst, is expected to grow to 30,250 in seated), the Royal Palace, the Peace Waldo Mountains (480 apartments), 2022/2023. Palace, the museum, ZuidDuin (414 dwellings), Binckeiland 25,000 miniature park Madurodam and the (240 dwellings), New Norfolk (237 The Leiden University College presence of the sea. dwellings) in Scheveningen and Park The Hague opened in 2009 and is Hoog Oostduin (218 dwellings) in the only research university in the dwellings in the coming decade The Hague had about 4.6 million . city (and ranked no. 67 worldwide The Hague is the capital of the The Hague is the capital of the visits in 2015, which makes it the according to THE). In 2013 it moved province of Zuid-Holland and most visited city in the Netherlands, Students to its permanent location at the Anna province of Zuid-Holland and seats the national government of after Amsterdam and Rotterdam. Of The number of students living and van Buerenplein, a recent developed seats the national government the Netherlands as well as most those visitors about 897,000 spend studying in The Hague is increasing in the city centre. At this location foreign embassies and around the night in a hotel (ca. 22.4% more substantially. The city houses many academic facilities and residential Average transaction price of of the Netherlands. With a 150 international organisations, than 2012). The city centre attracts universities of applied sciences and accomodations are combined. dwellings in The Hague population of about 520,000 including the International Court about 32 million visitors per year. has a strong connection with the The University College allows 200 of Justice and the International University of Leiden, which fosters enrolments annually and currently inhabitants and more than one Criminal Court. There are also some major events a fast growing satellite location in has 600 students. The students at million inhabitants including the in The Hague that attract a lot of The Hague (the Leiden University the University College are all housed € 260,000 The city has 520,000 inhabitants, visitors. The biggest events are Campus The Hague). As The in rooms of the University College suburbs, it is the third largest which is projected to grow to the International Firework Festival Hague is the home town to many in the same building as the college over 640,000 inhabitants by (400,000 visitors), Parkpop (225,000 international public bodies, among itself. The rents of these dwellings city of the Netherlands. 2040 (+23.4%). The disposable visitors), Sculpture Festival (223,000 them the International Supreme are included in the educational fees. 13.4% increase yoy household income in The Hague is visitors) and the City-Pier-City Run Court, the city attracts studies that € 32,200 per year, which is 8.3% (200,000 visitors). have a strong tie with this sector. lower than the national average of € 35,100. Residential According to NVM the average Economy transaction price in The Hague The city hosts 48,680 companies increased by 13.4% yoy to currently that provide work for a total € 260,000 (slightly above the national FIGURE 3 of 271,960 employees. Large average of € 258,000). The average Inhabitants Development & Forecast employers with their head office selling time in The Hague decreased in The Hague are AEGON, APM from 60 days in the second quarter

750.000 Terminals, ASN Bank, Nationale of 2016 to 37 days in the second Nederlanden, Royal Dutch Shell, quarter of 2017. In the same period 650.000 Siemens AG, T-Mobile and PostNL the number of transactions decreased 550.000 (royal Dutch mail). The Hague has, with 4.3%, due to less supply.

450.000 after Amsterdam, the largest office stock of the Netherlands. The residential stock of The Hague 350.000 consists of about 253,200 dwellings. 250.000 The share of business services The owner-occupier market has a

150.000 within the labour market in The 42.2% share of the total market, Hague is 29.4%, compared while the rental market has a share 50.000 2015 2020 2025 2030 2035 2040 2045 2050 to 26.9% for the Netherlands. of 55.1%. The comparable national Around 42.1% of all employment figures are 56.2% and 42.5% FIGURE 4 is allocated to the public sector respectively. The social housing Households Development & Forecast and care, and 13.7% to trade and stock in The Hague amounts to transport. The national figures 30.5%, which is slightly higher than for these are 26.9% and 23.5% the national average of 29.5%. The 350.000 respectively. private rental sector amounts to 24.6% of the total 300.000 The economy of the The Hague housing stock, compared to 13.0% 250.000 area is about 5.1% of de Dutch in the Netherlands. GDP according to Oxford 200.000 Economic. The economy of the The municipality of The Hague has

150.000 region is forecasted to grow about the ambition to realise 25,000 new 1.6% in 2017 and 1.3% in the years dwellings in the coming decade. 100.000 thereafter, which is comparable to Most of these are aimed at young

50.000 the national average. families. 2015 2020 2025 2030 2035 2040 2045 2050

Sources: CBS, CPB, NVM, Lisa, Funda.nl, Municipality of The Hague, ABF/Primos, Vastgoedmarkt, PropertyNL, Savills Research

6 7 The Hague Special October 2017

Central Business District Malieveld

D G E E N TW N U E O W H E n G K a la O p m N ka T IN e A Ko A G TR S S VAN STOLBE K IA NA RGLAAN A ES LIA D R JU E E TH A K Koekamp DE O N G L IN E H G EW E S S I KA T D D U S E HO T EN R ID A ZU A BE T 26 27 The area covering the Central 25 13 L O T 28 U U I Business District, Bezuidenhout O S H E R OO H V K E O and Beatrixkwartier amounts to GE N N I 12 R LAN N I G Ë S T 1.4 million sqm and is the most T T U E N S N T E R L prestigious office concentration A A 10 11 T in The Hague 23 The Hague central 14 P R 9 I Hofvijver R N S 24 IJ E N S 21 S 8 T B 29 P E L R A A E T I 22 A N T R Binnenhof IX L 7 6 A A N 3 20 L E N 16 K E S U The Hague Laan F T 19 T T O PO R R van NOI H E 15 A EC EN G A IT N T H 4 30 U LA T B S HOFWEG E T T B K K De Monarch I (9) R R AA MA A 2 R M N sold in Q2 2016 to VE F 17 AL 18 R Amundi Real Estate K TU V 5 E N E AT S A T T T R AA A R T R 1 A A IS T T R A U S AA ST T P L R N T S AA S T R A C NS U A W AT H E E TR T A E H H S H R N P N K L K N A C C ST e A V IJ A L k W V R SE s EG W G tr LT JS a E E I a A TR t N P AN EM V ED G L e k s t r R a t New Babylon (13) A a aa t tr A us sold in Q4 2015 to M sa S eu T G Victory Advisors R on A V A V T ON at G ra H E st O U T n EK SA A aa W US A Z AT TR FIGURE 5 TR ER AA S ST T E RA LD AT Map of central office area Office buildings E Government buildings H C S Most buildings in the 1 Haagse Poort 7 The Bridge 13 New Babylon 18 City hall 24 Ministry building Beatrixkwartier area are built or 70,000 sqm office, renovated in 2014 9,700 sqm office, delivered in 2001 43,000 sqm office, appartments & retail Municipality of The Hague Ministry of Health, Welfare and Sports have been renovated in the past decade. New buildings e.g. are De 2 Siemens Head Office 8 Monarch III 14 Zurich Toren 19 Ministry building 25 Ministry building Monarch I (2012; 18,000 sqm) and 30,000 sqm office, renovated in 2016 248 appartments and office space, 20,000 sqm office, delivered in 1999 Minisrty of Security and Justice Ministry of Finance under construction Monarch II (2013; 16,000 sqm). 3 Prinsenhof 15 De Kroon 20 Ministry building 26 Apenrots Prinsenhof / WTC was built in 60,000 sqm office, 200 apartments & 9 De Monarch I 10,000 sqm office & retail, delivered in Ministry of the Interior and Kingdom Relations Future redevelopment 2006 and renovated in 2016. This hotel, renovated in 2016 18,000 sqm office, sold in 2016 2012 building consists of 60,000 sqm 21 Ministry building 27 Ministry building offices, 200 apartments and a 200 4 Beatrix II 10 Monarch Tower 16 Muzentoren Ministry of Foreign Affairs Ministry of Economic Affairs 32,000 sqm office, renovated in 2012 16,000 sqm office, delivered in 2013 15,000 sqm office, delivered in 2001 Ministry Intrastructure and the Environment room hotel. 28 Palace of Justice 5 Haagsche Zwaan 11 KPN 17 Terminal 101 22 Ministry building Palace of Justice Other buildings that have been 18,500 sqm office, renovated in 2010 29,500 sqm office 10,500 sqm office, renovated in 2016 Ministry of Social Affairs and Employment renovated are Haagsche Zwaan 29 Former Ministry building (2010; 18,500 sqm), the PostNL 6 Zilveren Toren 12 Centre Court 23 Ministry building Redevelopment to residential building (2012; 32,000 sqm) and 27,500 sqm office 40,000 sqm office & 123 appartments Ministry of Education, Culture and Science 30 Beatrixpark Haagse Poort (2014; 70,000 sqm). Several government agencies 8 9 The Hague Special October 2017

Occupier market

On the other hand the submarkets FIGURE 9 FIGURE 10 New CBD (7.1%), the Centre (8.7%), Take-up 2016-2017H1 by sector Prime rents per area Bezuidenhout/Beatrixkwartier (6.2%) Prime Rent Secondary Rent and the Convention Centre Area New CBD 200 (6.0%) all have their own qualitative Unknown9% 130 trademarks and show considerably 1% Other 29% Centre 195 lower supply and vacancy rates. Business 100 services Beatrixkwartier 205 Occupier transactions 13% 125 TMT Figure 6 displays gross take- 125 Binckhorst 60 up figures in the The Hague Stock and vacancy agglomeration (including Pijnacker- 3% 140 The office market in The Hague Distribution Laakhaven 80 After a considerable increase up , Leidschendam-Voorburg & Retail 160 is in transition. The Dutch until 2009 the office stock in The and Rijswijk). The total demand has Convention Centre Area 120 Hague has been relatively stable been quite stable recent years with government, the major occupier, 4% ForePark 140 until recent. Last years the stock take-ups between 100,000 sqm Insurance 90 38% & Finance is consolidating and therefore has been decreasing, mostly due to and 125,000 sqm annually. The Public Rijswijk 135 redevelopments and conversions. exceptions are 2011, when take-up Services, 65 leaving and/or selling a significant Education & 3% Total stock stands at just above 5 had a trough of less than 50,000 Health Manufacturing & Industry 0 50 100 150 200 part of her offices. On the other million sqm and is the second largest sqm, and 2016, when take-up was hand the cyber security sector is in the Netherlands. about 93,000 sqm. Rents upcoming, fueled by The Hague Vacancy is high at the office Two very large transactions were The Business Services sector and Gross rents peaked in 2008 at € 215 Secondary rent levels start as low as locations of Laakhaven (17.7%), registered in 2016. These concerned the Public Services, Education per sqm lfa per annum. After an initial € 60 to € 65 per sqm lfa per annum Security Delta (HSD). Binckhorst (21.0%), Forepark the Hoge Raad (government) leasing & Health sector together were drop in the recession period, peak in the areas Binckhorst and Rijswijk. (25.8%) and Rijswijk (14.7%). Almost 15,000 sqm at Korte Voorhout 8 and responsible for around 66% of the rents now stand at around € 205 per In the more attractive areas, like the all are outdated areas with large Jacobs subleasing 10,800 sqm at total take-up in 2016-2017H1. sqm lfa per annum in the New CBD CBD, secondary rents start at € 130 qualitative problems and limited the Siemens Head Office (at Prinses and the Beatrixkwartier. per sqm lfa per annum. unique selling points. Beatrixlaan 800).

FIGURE 6 FIGURE 8 Take-up The Hague area per year The Hague area main office locations Take-up No. The Hague Stock Supply Vacancy 140.000

120.000 1 New CBD 799,900 56,900 7.1% 6 100.000 2 Centre 733,400 63,900 8.7% 80.000 3

(sq m) (sq 60.000 3 Bezuidenhout/ Beatrixkwartier 603,700 37,300 6.2% 1 10 40.000 4 Binckhorst 299,800 62,900 21.0% 2 20.000

0 5 Laakhaven 182,600 32,300 17.7% 4 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 5 6 Convention Centre Area 296,800 17,700 6.0% 7 FIGURE 7 Stock and supply in The Hague area 7 Forepark 84,200 21,700 25.8% Sq m stock Availability Other The Hague 1,000,100 65,000 6.5% 6.000.000 20% 18% 5.000.000 8 Rijswijk 947,200 139,700 14.7% 16% 14% 9 4.000.000 8 12% 9 Pijnacker-Nootdorp 32,400 2,200 6.8% 3.000.000 10% 8% 10 Leidschendam-Voorburg 179,600 18,500 10.3% 2.000.000 6% 4% 1.000.000 Total agglomeration 5,159,700 518,100 10.0% 2% 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 17H1 Total The Hague City 4,000,500 357,700 8.9%

10 11 The Hague Special October 2017

Investment market Turn of the tide

Two of these four transactions Among the largest conversion are the Office location (Willem Witsenplein 6) concern properties located in the 100,000 sqm offices of the Ministries and the 32,000 sqm former Shell HQ, Bezuidenhout/ Beatrixkwartier. De of Security and Justice as well as which will be converted into residential. Zilveren Toren (27,500 sqm) was Interior and Kingdom Relations (BZK) purchased by IntReal for € 84.2 million, in the Wijnhavenkwartier. These have The 40,000 sqm former KLM while Amundi Real Estate purchased been redeveloped into apartments, a headquarters (Plesmanweg 1-6) and the 17,050 sqm De Monarch I for university and commercial space. the 41,700 sqm former headquarters € 63.0 million. of the Royal Netherlands Army The 50,000 sqm office at the Anna (Binckhorstlaan 135-137), are for sale The other two investment transactions Hannoverstraat, previously occupied and also here the aim is to redevelop completing the top 4 are located by the Ministry of Social Affairs and the locations to other use. within the Binckhorst. This area is Employment, will also be converted, transforming from an (outdated) mainly to residential use. In the New developments Investments in the office market in Investment market industrial and office location into a From 2010 onwards almost meantime it serves as shelter for Recent developments have all taken After a trough in 2012 office mixed-use area. A fair share of the refugees and an extension for The place at the city centre, the New The Hague have been increasing investments in The Hague currently vacant properties will be 425,000 sqm of offices have been Hague Security Delta. CBD area and the Bezuidenhout/ in recent years, resulting in a peak agglomeration have been stabilizing transformed to residential units and/or Beatrixkwartier area. Recently the again at about € 250 million annually. In student housing. taken out of the office market in The office building occupied by the renovated office building Terminal 101 in 2016. 2016 the investment volume increased the city of The Hague, generally Ministry of Foreign Affairs at the (10,500 sqm at Schedeldoekshaven substantially, peaking at almost € 480 Yields Bezuidenhoutseweg 67 is also listed for 101) was reopened. million. Also 2017 started good, with Gross yields for prime offices are by converting them to other conversion. The Ministry will relocate a total investment volume of € 200 stable and stand at 6.0% for the New uses. In the vast majority of the to the building in which the Ministry of The municipality of The Hague recently million in the first half year. CBD and 6.25% for the Beatrixkwartier Infrastructure and the Environment is announced a large area development area and the city centre. The other cases this concerns residential located, leaving behind 83,000 sqm. in the Beatrixkwartier area (Central In table 1 the major investments submarkets have prime gross yields use, either regular apartments, The office at Bezuidenhoutseweg is for Station East). This area will be the transactions in 2016 and 2017 H1 are starting at 8.5%. sale, but will temporary house all the link between the economic cores of listed. The top 4 transactions total but also student housing or care MPs, the Prime Minister and his staff, The Hague surrounding train stations € 253.5 million and are responsible oriented living. administrators and officials during the Central Station, Hollands Spoor and for more than half of the total 2016 5.5 years renovation of the Binnenhof. Laan van Nieuw Oost-Indië and the investment volume. Bezuidenhout area. Next to 2,000 new Other large conversions include the houses, 30,000 sqm of facilities such Terminus building (Stationsplein 75) as office space, educational space and to student housing, the former Patent restaurants and bars will be developed.

FIGURE 11 FIGURE 12 Total investments per year Prime gross yield per area

The Hague agglomeration Prime gross yields (kk) 500.000 New CBD 6,00% 450.000 400.000 Centre 6,25% 350.000 Beatrixkwartier 6,25% 300.000 250.000 Binckhorst 9,00%

x 1,000) 41% € ( 200.000 of office investment Laakhaven 9,50% 150.000 volume by Dutch investors in 2016 - 100.000 2017H1 CCA 8,50% 50.000 0 Forepark 9,50% 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 0,0% 2,0% 4,0% 6,0% 8,0% 10,0%

TABLE 1 Major investment transactions in The Hague 2016 - 2017H1

Period Property Address Submarket Sq m Price (€) Price/ sqm Buyer Seller 16Q4 Zilveren Toren Prinses Beatrixlaan 15 Bez.hout / Beatrixkw. 27,5 0 0 84,200,000 3,060 IntReal Kanam Grund

16Q3 The Green Campus Maanplein 1 - 146 Binckhorst 79,110 68,500,000 870 Borghese Real Estate & COD Commerz Real

16Q2 De Monarch I Prinses Beatrixlaan 5 - 7 Bez.hout / Beatrixkw. 17,0 5 0 63,000,000 3,700 Amundi Real Estate Union Investment

16Q2 HS Building Joh. Westerdijkplein 1 Binckhorst 21,230 45,500,000 2,14 0 Union Street Investments First Sponsor Group Ltd

17Q2 Headquarter OPCW Johan de Wittlaan 32 Convention Centre Area 16,730 38,000,000 2,270 Avignon Capital CK Capital/ Monarch Alternative Capital LLP

16Q3 Former KPN Maanplein 55 Binckhorst 19,210 37,800,000 1,970 Corum AM Borghese Real Estate

16Q1 Part of Speedy PF Bordewijklaan 38 Bez.hout / Beatrixkw. 9,470 26,100,000 2,760 Intown Property ASR Vastgoed Vermogensbeheer

17Q2 Kennedy Centre Stadhoudersplantsoen 214 Convention Centre Area 13,730 25,650,000 1,870 VORM Bouw Williams House

17Q2 Former ABN AMRO Kneuterdijk 8 Centre 9,400 23,000,000 2,450 DHG ABN AMRO

12 13 The Hague Special

Savills team Please contact us for further information at +31 (0) 20 301 2000

Clive Pritchard Jan de Quay Reinier Wegman Wouter Stevens Jordy Kleemans Martijn Pustjens Investments Investments Investments Agency Research & Consultancy Research & Consultancy Head of country Head of department Head of sales Head of department Head of department Researcher [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

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