Investing in bricks: an old pattern in a new era
Anyone looking to build or buy a property today is entering a market shaped by centuries of dynamics. As early as the eighteenth century, wealthy people of Amsterdam were looking for ways to make their assets pay off. When government bonds temporarily became less attractive, money flowed into real estate. This led to rapid price increases, while rents remained the same. A pattern that seems to be emerging again now. In a world of low interest rates, geopolitical uncertainty and tight housing markets, investment money is flowing back into bricks and mortar. The question remains: can we still cope?
Building in Amsterdam: precision work between rules and risks
Because building itself is more complex than ever. Not only have building costs risen, the rules have also become more extensive. In Amsterdam, not only the zoning plan determines what may rise on a plot, but also the environmental plan, ground lease conditions, environmental rules, noise requirements and social distribution standards. The 40-40-20 rule, where social rent, medium rent and free sector must each have their place, ensures that developers have to calculate their projects down to the decimal point. One mistake or delay can rock the entire plan.
Yet there is something that continues to make real estate attractive: you see the results. It is a profession where you literally build the city. Lawyers and developers tell how they spend years involved in a project that you eventually just see on a street corner. A tower on the Zuidas, a residential block in New West, a transformed office facade in Zuidoost. Everything starts with paper, but ends up in stone. That makes the work tangible – and unruly.
City grows in layers: past, market and future intertwined
At the same time, the way real estate changes hands is also changing. Whereas a large part of Amsterdam real estate used to be sold through public auctions, the process is now largely out of the public eye. Information about transactions, returns and risks is in the hands of brokers, notaries and institutional investors. This makes the market less transparent, while there is a need for insight. Because how can we build a future-proof city if we do not know exactly what is going on?
The next few years will be decisive for whether Amsterdam can keep up this growth. There are ambitious building plans, but many projects are stalled or pushed forward. The sales market seems to be recovering, partly thanks to a slight fall in interest rates. But the rental market is more vulnerable. Landlords are dropping out, housing associations are building below cost, and regulations are making margins wafer-thin. If nobody builds the rental housing of the future anymore, not only the system but also the liveability of the city will come under pressure.
What history teaches us is that building in Amsterdam has never been simple. The city does not change by leaps and bounds, but by small, slow shifts. Layer upon layer. With rules, objections, investments and trust. This is precisely why every new house, every block and every tower is not just another building, but a reflection of its time. And perhaps that is what makes Amsterdam so special: that the city always keeps growing, even if it takes a while to do so.
Curious about the other blogs in this blog series Amsterdam’s Trading Culture, click here, or listen to the podcast series here.
