The outlook for 2020

Economic picture slightly less favourable

Economic growth is slowing down in the Netherlands due to the decline in global growth and, to a lesser extent, the issues related to nitrogen emissions and PFAS levels. Unemployment reached its lowest point since before the financial crisis in 2019, but was expected to remain exceptionally low in 2020. Labour market shortages are leading to an increase in contract wages. Inflation was expected to slow down this year, as the impact of last year's increase in indirect taxes fades away. The budget surplus was projected to decline as a result of expansionary policies and weaker growth, but the decline will be lessened by significant underinvestment. The main risks to the Dutch economy relate to US trade policy and Brexit, both in 2019 and this year, but there are also domestic risks due to the issues around nitrogen emissions and PFAS levels (source: CPB Netherlands Bureau for Economic Policy Analysis). In addition, the recent outbreak of the coronavirus (COVID-19) changes the Global and Dutch economic outlook dramatically.

Coronavirus (COVID-19)

Late December 2019, the coronavirus (COVID-19) outbreak started in China and spreading throughout Europe in early 2020, causing serious illness to thousands of people and leading to many deaths. Governments across the globe are taking extreme measures to contain the virus and to prevent the further spread. This includes sealing off cities, preventing travel and requiring people to stay in their homes. At this point, we don't know how long this pandemic will last, but it is clear that the impact on the Global and Dutch economy will be severe. It is too early to determine the exact impact for Vesteda.

To prevent the further spread of the coronavirus, Vesteda has also taken measures regarding the operational activities of the company, such as additional hygiene rules and strict limitations regarding travel, physical office meetings and external appointments. At this point (18 March 2020), it is hard to predict the complete impact for our business. Initial tests confirm that our business operations continue to run well and that we can continue to deliver almost all our services to our customers.

We expect higher costs for tenant turnover and higher frictional vacancy, especially in the higher segment and in some commercial spaces. Furthermore, outstanding receivables and loss of rent will be higher and the value of the assets will be negatively impacted. The Management Board will closely monitor the development of this crisis and takes additional measures if needed, prioritising the health and safety of our tenants and employees.

GDP growth and unemployment rate (%)

Source: CPB Netherlands Bureau for Economy Policy Analysis

On a more positive note, purchasing power is set to improve in the coming year, due to increases in real wages and tax cuts. On average, purchasing power will increase by 2.1% in 2020. As a result of the announced exemption scheme for pension funds with a solvency ratio of at least 90%, the implementation of pension cuts and increases in premium payments will be postponed until 2021 at most pension funds. For the coming year, the increase in the purchasing power of pensioners is estimated at 1.0%. Although pensioners will benefit from tax cuts, there will be little if any indexing of supplementary pensions. All of these predictions are pre corona crisis.

Megatrends affecting the Dutch housing market

The Dutch housing market in general and the mid-rental market in particular are facing a number of serious challenges. For one, demand for affordable housing continues to grow faster than any new supply. At the same time, we are seeing a change in the demand in terms of product, location and building specifications, all of which are being influenced by the following trends.


There is a growing imbalance in housing stock, which is in turn affecting housing affordability. And this is not just a phenomenon in the Netherlands, but is a global issue. The scarcity of new locations, long lead times for developments and limited capacity to scale up building projects, the regulation of the housing market and the latest restrictions on nitrogen risk has led to a sharp drop in building permits. We believe that the affordability issue is here to stay for the coming years and this may result in new regulation.

Climate change

The built environment has a major impact on greenhouse gas emissions and the changing climate. We will continue to focus on energy efficiency and clean energy sources. We will help to limit the impact of GHG emissions and make our assets resilient in the face of the effects of climate change, and we will comply with Dutch regulations related to the energy transition.

Climate change

Source: KNMI (Dutch Meteorological Institute)

Shift in demographics

Population growth combined with a shift towards smaller households is accelerating the already rapidly growing demand for housing. This combined with the ageing of the population is driving demand for a different product, which tends to be smaller and aimed at facilitating independent living for a greater length of time. This has an impact on our programme of requirements and product market combinations. In addition to this, we will investigate how to attract the large and growing group of middle-income, independent seniors.

Shift in demographics

Urbanisation and transit-oriented development

Urbanisation is driving the ongoing growth of large cities, which are expanding into ‘urban regions’ and will eventually become metropoles (on a Dutch scale). The following chart shows that 75% of population growth is expected to take place in these urban areas. The access to jobs is a key factor in this growth. So investing in the right locations is vital to ensure long-term growth. This has an impact on our view of primary regions we have already invested in or will invest in in the future.


Source: Statistics Netherlands


Technology is growing at an exponential pace. Vesteda is investing in a modern IT architecture to ready ourselves for the future. For example, we are implementing and launching a new ERP system, a new website, a new commercial CRM system and a state-of-the-art data warehouse. This open and advanced architecture makes it possible to develop or implement solutions in the PropTech domain (smart buildings, preventive maintenance). Additionally, we are shifting our focus to data-driven decision-support by implementing data science technology.