Investing in the Netherlands
As a general consensus, Western Europe is seen as a formidable investment environment, based on economic and political security, currency stability and a firm, fluid trade system. The Netherlands is no exception, with an economic moat that reflects the country’s diverse business cohesion. Its strategic location works wonders for European and global trade, tourism and international relations - the country was ranked No1 on the DHL’s Global Connectedness Index, and 95% of Europe’s trade hotspots are just 24 hours drive away from Amsterdam or Rotterdam.
Aside from its geographical benefits, the Netherlands also ranked 8th in the world in the 2022 Index of Economic Freedom, and scored 90 out of 100 for investment freedom for more than 20 years running. For many, the Netherlands might not immediately jump out the page against the historical appeal of its neighbouring competitors, but its innovative backbone is breeding some serious interest in numerous sectors.
Drawing on international influence, foreign capital has been flying in over the last few years. Nearly 400 companies invested in The Netherlands in 2019 alone; contributing EUR4.3B to the Dutch economy. Albeit the pandemic weighed on economic growth over the past two years, the pattern of foreign investment is likely to regain steam.
Is the Dutch economy a good target for your investment? Learn about the popular investing methods in The Netherlands, from ETFs to alternative methods such as real estate crowdfunding and P2P lending.
Can Anyone Invest In The Netherlands?
The investment landscape in The Netherlands favours both domestic and international investors. Whilst some European nations have tight regulations for foreign investment, the Netherlands is more or less investor-friendly. Foreign business investors can obtain a residence permit with an investment of EUR1.25M, providing legal entitlement to reside in the country.
The Dutch stock market remains a popular choice due to its exposure to leading pillars of Dutch innovation and creativity. Stockbrokers tend to offer a compelling selection of Dutch stocks for any eager trader, but international buyers might be faced with extra costs and foreign exchange fees.
Property is another alluring investment, not affiliated with any off-putting minimum spend or complex application process. This being said, real estate is a high-end investment regardless, and with the Netherlands housing market on a sharp bounce off the back of the pandemic dip, buying foreign property as an investment might not be feasible for everyone. More frugal investors keen on the booming property market might want to look at real estate crowdfunding, an explosive investment trend that cuts out the need for a banking intermediary or even a large capital pool.
Investing In The Netherlands Through ETFs
The easiest way to invest in Dutch companies is through broad index funds that typically track a collection of the most actively traded shares, offering a balanced level of exposure with long-term overall growth as the key focal point. Exchange-traded funds (ETFs) in the Netherlands are effectively low-risk investment pools that provide a reflective snapshot of the key drivers of the Dutch economy.
Due to unsavoury - sometimes even negative - interest rates, letting capital sit in the bank doesn’t make all that much sense for savvy savers. Stocks, shares and ETFs are growing in popularity amongst the domestic population as people seek the most efficient way to save money without being hampered by lacklustre interest rates.
Euronext Amsterdam is the main stock exchange, a gateway into the financial health of the Netherlands’ most prized companies. The AEX index follows the 25 largest and most actively traded shares across the entire market, similar to the UK’s FTSE 100 or Germany’s DAX 40. Expanding the horizon, investors looking to widen the scope might want to look at the EURO STOXX 50, which tracks the largest 50 companies in the Eurozone. 13.9% of which currently reside in The Netherlands. Both of these indexes are normally available at any registered stockbroker.
The largest ETF by assets-in-management is the Blackrock-managed iShares MSCI Netherlands ETF, tracking 24 large and mid-cap constituents. Here are a few other popular options to look over:
Bear in mind that each fund will vary in different degrees when it comes to cost and performance, so investors will want to do their own research.
Real Estate Investing in the Netherlands
With the property market being one of the most sought-after investment avenues, the market is increasingly saturated and competitive. Housing prices in the Netherlands are running away from the typical saver, so how can you funnel your money through property avoiding the unrealistic price tag? Real Estate Crowdfunding in the Netherlands; a new era of investing that pools together groups of investors to finance forthcoming real estate projects. Capital is often raised efficiently, and return rates are competitive, reaching around 8% sometimes. Appealing given the possibility of flat or negative interest rates in Dutch banks. Similarly, these platforms offer international investors a chance to get involved in the competitive Dutch property market.
Real estate crowdfunding flourishes in areas where new property developments chase the tail of ever-increasing demand. In the Netherlands, housing shortages in vital cities like Amsterdam, Rotterdam and The Hague create a stark opportunity for a booming real estate crowdfunding market.
Now might well be the time to get involved. In 2020, EUR417M was funded through crowdfunding, but in 2021 this almost doubled to EUR730M - it doesn’t take a genius to recognise a powerful trend emerging here.
There are currently 12 active real estate crowdfunding platforms for the Netherlands, with popular choices like Max Crowdfund and Bouwandeel offering investment options from EUR100-200.
Lending & debt investing in the Netherlands
Crowdfunding in the Netherlands has taken shape in a range of sectors other than just property, with a range of debt notes available for investment. With a total of over 20 P2P lending platforms, opportunities are rife and diverse.
The Netherlands is known for its trademark innovation and forward-thinking creativity, so it’s no surprise that platforms like Oneplanetcrowd focus on funding for green, sustainable projects. Similarly, although operating abroad, Lendahand revolves around investing in developing economies. Multiple sites offer more traditional debt notes for businesses, Collin Crowdfund lists investments from as little as EUR500.
The Whole Story
The Netherlands’ badge of creativity and modern innovation makes it a clear-cut target for domestic and international investment. Exposure to leading Dutch companies can be easily accessed through a range of ETFs tracking the AEX index, or the wider reach of the MSCI Netherlands. The climate for alternative investments has been stoked by a constricting housing market, poor interest rates for investors, and growing support for Peer-to-Peer lending infrastructure.
- DHL: “DHL Global Connectedness Index 2021 Update”
- Heritage: “2022 Index of Economic Freedom Netherlands”
- The Global Economy: “Netherlands Investment Freedom”
- Thomson Reuters Practical Law: “Investing in the Netherlands”
- The Government of the Netherlands: “Foreign Investors”
- Global Property Guide: “The Netherlands’ house price boom accelerates”
- STOXX: “The EURO STOXX 50 Index”
- De Nederlandsche Bank (DNB): “The housing market in major Dutch cities”
- Crowdfunding Cijfers: “Crowdfunding in Nederland 2021”