a.s.r. real estate

The rise and rise of Eindhoven

Eindhoven is one of most promising cities in the Netherlands. Located in the south of the country, the city is home to a number of renowned and innovative companies (Philips, ASML) which attract highly skilled personnel from abroad. Looking forward, the city’s reputation, character and accessibility will ensure that it continues to see above-average demographic and economic growth. This provides a sound basis for a range of real estate opportunities.

Back to the beginning: Philips’s impact on Eindhoven
The electronics company Philips has played, and continues to play, a major role in the development of Eindhoven and its surroundings. Established in 1891, the company has provided both employment opportunities and housing for the city’s inhabitants. Philips built approximately 35,000 residential units in the 1960s. As the company expanded, several spin-offs have also become major international players, like Philips’ former chip department NXP and chip machine producer ASML. The opening of the Philips Natlab campus (now known as the High Tech Campus Eindhoven) to other companies in 2003 helped to ramp up Eindhoven’s profile as one of Europe’s major centres of innovation.

Work followed work
Some spatial economists argue that work follows people. But the history of Eindhoven shows that actually work can also just generate more work. In the first half of the 20th century, Eindhoven’s population grew due to the presence of good jobs. Nowadays, highly skilled expats are drawn to the region to work for some of the world’s leading tech companies and related businesses.

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Eindhoven will continue to attract people and businesses
Looking forward, Eindhoven has a better-than-average demographic and economic outlook. Eindhoven boasts higher growth in household, population and disposable income than the average for the Netherlands (Oxford Economics, 2019). The expected increase in professional, scientific and technological employment (33%) is almost triple the Dutch average (12%). 

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Innovation is here to stay
With strong tech and science-related employment growth, Eindhoven looks set to consolidate its innovative strength and appeal. The graph below shows the current percentage of employment in innovative sectors in various Dutch cities, both today and in 2035 (Oxford Economics, 2019). The size of the bubbles indicates the size of the total workforce.

Eindhoven has a high percentage of tech employment and ranks second, only behind Delft. Both Eindhoven and Delft are home to a university of technology. It is worth noting as well that Eindhoven is also in the top 5 Dutch cities with the highest overall level of employment.

undefinedThe search for tech talent is becoming ever more important for companies. Compared to other regions, the labour market in Eindhoven is more knowledge-intensive and therefore attracts innovative companies. This is driving up the demand for office space, resulting in a tight office market with strong market rental value growth and falling vacancy rates. However, Eindhoven still needs to develop new office stock to fully benefit from these office market fundamentals. The overall stock of office spaces is relatively old, and high-quality office in the city is at a premium. 

Future investment attractiveness will be driven by the continuing rise of the innovation and tech-driven sectors.

Market opportunities in Eindhoven
With its tech employment profile and sound economic and demographic forecasts, Eindhoven harbours opportunities in every real estate sector

Science parks: The High Tech Campus (HTC) is considered one of the most successful examples of a Dutch science park. The campus houses around 200 companies and roughly 50 start-ups. This concentration of knowledge-intensive companies makes it a very attractive area for tech companies. The High Tech Campus Eindhoven is owned by one private investment company, which makes real estate activities for other parties somewhat challenging. However, potential redevelopment projects and/or real estate developments in other areas, such as the campus of the Eindhoven University of Technology, provide for interesting opportunities.

Offices: Tight supply is pushing up rent levels for office space in the city centre. Sound office employment growth and relatively old office stock is amplifying the demand for modern high-quality office space in the city centre. The large-scale ‘Knoop XL’ development, next to Eindhoven Central Station, is a response to the growth in demand.

Residential: Solid growth in the number of households and falling average household size (more single-family households) provide a healthy base for quantitative and qualitative demand. This means that Eindhoven is one of ASR’s focus areas. Modern residential concepts with in-house services (gym, reception) or flexible rental contracts could be especially worthwhile for Eindhoven’s growing number of highly skilled workers and visitors.

Retail and catering: Food-related retail and catering can make the most of the rising population on green field development, especially around city-centre residential redevelopment projects. Tourists, temporary workers and business visitors can provide additional support for floor turnover, but LFA growth in city-centre retail is expected to remain limited, as it competes with alternative usages, such as offices and residential units.

Questions about real estate in Eindhoven? Contact Vinoo Khandekar or Luc Joosten.

Vinoo Khandekar
research manager
M: +31 (0)6 23 90 13 75
E: vinoo.khandekar@asr.nl

Luc Joosten
head of fund management
M: +31 (0)30 25 79 528
E: luc.joosten@asr.nl