The Netherlands faces major challenges. From increasing defence spending and upgrading ageing infrastructure to addressing the nitrogen crisis, easing pressure on the electricity grid and tackling a severe housing shortage. Solving these issues requires capital on a scale that the country cannot generate on its own.

As a result, calls are becoming increasingly urgent to attract not only domestic capital, such as that provided by major Dutch pension funds, but also international investors. This is particularly true for the real estate market. However, the Netherlands’ investment climate has suffered in recent years.

A decline in capital inflows

Data from Oxford Economics (2026) confirms this trend. The multi-year average of foreign capital inflows as a share of GDP fell from almost 30% in 2015–2020 to around 10% in 2021–2025. Even transit flows, for which the Netherlands has traditionally been a preferred gateway, declined structurally.

A similar shift is visible in the real estate market. In the period 2021–2026 YTD, the share of foreign capital fell to an average of 48%, compared with approximately 55% in 2015–2020.

^{SOURCE: Savills Data, Intelligence & Strategy (2026)}

Capital needs predictability

Capital is like water: it follows the path of least resistance. In real estate, this means that capital flows to markets where returns are highest, but above all where the certainty of those returns is greatest. It is on this second point that the Netherlands has become vulnerable.

The decline affects investors in different ways, but the underlying issue is the same: a fiscal and regulatory environment that changes faster than an investment horizon.

For private and smaller-scale investors, pressure mainly comes from the rental market and Box 3 taxation. The Affordable Rent Act (Wet betaalbare huur) has reduced maximum rents in the mid-market and lower rental segments to such an extent that letting property is no longer profitable for many owners. At the same time, taxation on rented residential property under Box 3 has risen to a level where annual cash flows have turned from positive to negative for many investors.

The government plans to ease the Affordable Rent Act from 2027 and reduce the transfer tax rate to 8%, but these are corrective measures introduced after the fact. What remains lacking is a predictable fiscal framework for mid-market rental housing that can be relied upon over the long term.

For institutional investors, the challenge lies elsewhere. As of 1 January 2025, the fiscal investment institution (FBI) regime was abolished for directly held real estate. Whereas a fiscal investment institution investing directly in Dutch property previously benefited from a 0% corporate income tax rate, the standard rate of up to 25.8% now applies.

Foreign investors seeking a tax-neutral entry into the Dutch market no longer have access to a workable REIT-equivalent structure, as exists in the United Kingdom, Germany and France.

In addition, the Netherlands has implemented the general interest deduction limitation under ATAD1—the earnings stripping rule—more strictly than required under European legislation. Interest is deductible up to 24.5% of fiscal EBITDA with a threshold of €1 million, whereas the EU directive allows 30%. For a capital-intensive sector such as real estate, this has a significant impact.

There are signs that change may be emerging. In a draft proposal, the European Commission is examining whether member states should be permitted to impose stricter rules than the EU minimum, potentially leading to a relaxation to 30% and a higher threshold.

The picture, however, is not entirely negative. The Netherlands continues to rank highly in international competitiveness indices, well ahead of Germany and Belgium. Its fundamentals remain strong: high-quality infrastructure, a highly educated workforce, low unemployment and a long-standing tradition of open trade.

The vulnerability lies mainly in relative performance. Other European countries are improving more rapidly, narrowing the Netherlands’ traditional lead.

Real estate as part of the solution

Real estate can help address these challenges and, in doing so, strengthen the investment climate itself. Many of the issues facing the Netherlands are spatial in nature. Defence requires production facilities and R&D space. The energy transition requires logistics rooftops capable of generating renewable power. Digitalisation requires data centre capacity. The housing shortage is, by definition, a real estate challenge.

Foreign capital invested in Dutch real estate therefore does more than acquire income-producing buildings. It finances the physical capacity the Netherlands needs to address its economic and social challenges over the long term.

For institutional investors with a long investment horizon, societal value and investment value are closely aligned. Yet these are precisely the investors most likely to be discouraged by the current level of uncertainty.

Our advice to the Dutch government

In our view, what can the Netherlands do to maintain its leading international position?

It should remove fiscal measures that drive away international talent and capital, rather than gradually making them less attractive. It should adopt a long-term vision that treats both domestic and international investors as partners. And government should move beyond merely talking about collaboration and actively foster it between national government, provinces, businesses and international investors.

The Dutch economy is unique: both a gateway to Europe and an export-driven powerhouse. The country should choose a clear strategic direction—such as cleantech and advanced manufacturing—and maintain that course across political cycles.

In addition, the Netherlands should introduce a workable Dutch REIT-equivalent structure, allowing institutional capital to invest on a tax-neutral basis without sacrificing the taxing rights policymakers sought to protect. Aligning interest deduction rules more closely with European standards is equally important to prevent the Netherlands from pricing itself out of the market unnecessarily.

Real estate should not be the final consideration in the investment debate; it should be one of its starting points. Anyone seeking to attract capital to the Netherlands must view the built environment as a tool that delivers both financial returns and societal value—and as the solid foundation on which the country can continue to build.