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Amsterdam: A Diverse Residential Real Estate Market

Mar 5, 2020 12:00:00 AM

Ongoing migration to major cities such as Amsterdam, The Hague, and Rotterdam is spurring demand for urban housing in the Netherlands, and supply is failing to keep pace.

On a recent visit to Amsterdam, the capital, I found the real estate landscape to be fascinating. Amsterdam is known for its elaborate canal system, narrow homes with gabled facades, and renovated houseboats. It’s often referred to as “the Venice of the North.” It originated in the 12th century as a fishing village, and by the 17th century, it had become one of the most important European ports and a center for finance and trade. Today, many of the world’s largest companies, such as Netflix, Tesla, Uber, and Phillips, are based in Amsterdam or have established their European headquarters there.

Amsterdam has both Social and Private housing, like many European cities. All housing is heavily regulated, with 55% of existing homes and 30% of new housing owned by Social Housing Associations, which are government-sponsored entities. These Associations rent or sell accommodation and also provide homes for older and disabled people. Both Social and Private housing are subject to many rules and regulations with Social Housing mostly meant for families with lower incomes.

Over the last 25 years, the popularity of living on a houseboat on Amsterdam’s canals has mushroomed. After years of being a cheap place to stay in an expensive city, houseboats and their mooring rights have become expensive, with prices escalating 40% over the last five years. A large percentage of the cost comes from the value of the berth and not the boat.

Depending on position, a houseboat berth may be worth half a million US dollars with the boat’s value a small fraction of that cost. Most houseboats have a seagoing hull, wheelhouse, and curtained windows with engines, fuel tanks, and cargo holds that are stripped to provide open-spaces with elegant living and sleeping quarters. There are about 10,000 houseboats in the Netherlands, with 3,000 of those in Amsterdam.

When making a sale, local houseboat real estate agents sell the license to the dock with the houseboat and transfer the “water deed” to the new owner. Complicated city rules govern the size, style, and even the underwater design of the houseboats, which change from year to year and may differ from canal to canal. Purchasers are usually privately funded, although there is a Dutch bank that specializes in funding houseboats. Some houseboats are luxuriously appointed, solar heated, and comprise over 3,000 square feet of living space.

Indications are that prices in Amsterdam and other major cities in the Netherlands will continue to rise in 2020, driven by low-interest rates, migration to the cities, and continued shortage in supply of new dwellings.

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