PRMD40048: Amsterdam Market Analysis Report for BT Group

This report provides a comprehensive analysis of the Amsterdam real estate market, focusing on commercial property opportunities for BT Group. The analysis covers market conditions, supply and demand dynamics, rental levels, and lease terms within the Zuidas Business District and surrounding areas. The report examines project considerations, including space requirements, branding rights, lease durations, and sustainability. It explores various project options, considering land ownership, ground rent, and tax implications. The research methodology involves a literature review and secondary data analysis to address research questions related to business needs, market challenges, and the impact of real estate decisions on the company's business model. The report aims to provide BT Group with recommendations for making an informed decision regarding their office space procurement in Amsterdam, ensuring optimal value for money and tax justifications.

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Report on market conditions in Amsterdam
Student name
Institute of afflation

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Executive summary
Through the present exercise, the factors defining the real estate decision in the context of a
case review for the Amsterdam market are studied. This analysis is a recommendation for the
BT group that intends to extend their business operations within Amsterdam Zuidas Business
District.While considering the success of any commercial property venture, a need to
understand the limitations of the land, and further develop an effective framework of needs,
requirement and market analysis is deemed necessary. In the present context the business
need of BT group aligns with the renting in Zudais region in Amsterdam.

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Table of contents
Introduction.........................................................................................................................................4
Research Aim...................................................................................................................................5
Structure and contents of the report..............................................................................................5
Literature Review................................................................................................................................6
Methodology........................................................................................................................................8
Research questions and aims..........................................................................................................8
Research approach..........................................................................................................................9
Findings................................................................................................................................................9
Project considerations.........................................................................................................................9
Project options...................................................................................................................................10
Discussion.......................................................................................................................................11
Conclusion..........................................................................................................................................11
Reference............................................................................................................................................13

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Introduction
The constant need of the businesses to expand their footing in the global market has
paved a need to understand the norms, and regulations in the leasing and property purchasing.
While opportunities for business expansion contributes towards managerial development and
financial gains (Shiller, 2013). Challenges with respect to the property management can raise
legal and business management concerns. A comprehension of aspects to be considered while
purchasing/leasing a property in a new region for business purposes helps in reducing the
stress of legal burden and economic outcomes of the company. Furthermore, a
comprehension of the aspects to be considered for real estate decisions helps the business
define their tax savings, business savings, and real estate value of the endeavour (Nozeman,
2014).
Through the present exercise, the factors defining the real estate decision in the
context of a case review for the Amsterdam market are studied. This analysis is a
recommendation for the BT group that intends to extend their business operations within
Amsterdam Zuidas Business District or in the immediate area around Schiphol Airport. The
company intends to define their business goals in the context of the property purchase/ lease
decisions.
When any business unit consider buying or entering a new market space, through
lease they need to gain a comprehension of the market’ supply and demand, legal
considerations and other aspect of business considerations, such that they can review the
problem areas, business needs, and identify the time and resources needed for such
endeavours (Savilis, 2018). The impact of any purchase decision is evident on the
organization framework, hence a need to define the attributes which underline the business
development though property development is recognized as important (Thankaraju and Issac,
2019).

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The present report define the significance of such projects, and analyse the options for
acquiring or using available business space as a part of the comprehensive Business Plan for
the company studied. The report gives into consideration that while market norms remains
standardized, the business also has to consider their individual needs to align purchase/lease
decision in property. A good understanding of space needs, critical factors impacting
purchase/ lease decisions are identified in the paper for the case context.
Research Aim
 To understand the property purchase/lease needs of the business
 To apprise the client of the market conditions in Amsterdam, and share details
regarding the availability of the property, supply & demand, take-up rates, rental
levels and lease terms for both existing buildings and design & build.
 Provide a rental advice plan for the client that provides them optimum value for
money and tax justifications.
Structure and contents of the report
The report provides details regarding the availability of space, the usability of space
and other important decisions that have an impact on the property selection factor for the
business. While the report is presented in context of the case study, the data collected will
also provide scope for comprehension of factors to be considered while purchasing/leasing a
property unit in a new market in general. This comprehension will further contribute towards
understanding the drivers impacting the real estate decisions for any business (Jodevicious,
2016).
The research will be completed through an analysis of the business and real estate
market analysis of Amsterdam, and review of the information available on web resources and
academic resources in the context of the real estate decision making. The data available

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online over the last years (10) will be selected for this review. This literature review section
will comprise of analysis of the factors to be considered while purchasing or leasing a
commercial property, and discuss the pros and cons of each aspect. The findings section will
discuss the market size, norms, options and supply-demand of the commercial property in
Amsterdam. The report will further discuss recommendations for BT groups in terms of
making the optimum business expansion decision.
Literature Review
A typical inquiry among business owners is whether to purchase or lease commercial
property. The most imperative thing they need to think about are the expenses. While it is
recognized that purchasing commercial land is a superior choice owing to the aspects like
property appraisal, long terms savings, building equity development and tax break (Zeller et
al. 2015). However, renting/ leasing a property allows the business to have reduced property
liability, flexible business operations and further higher liquid asset with the business.
When choosing to purchase or lease commercial land, it is important to consider
whether one will manage the property, and tie up fluid capital in commercial land? Or that
the business need the adaptability of a lease (Lemmons and Karstens, 2009). Other aspects to
be considered in this regard include neighbourhood drifts in the commercial land market, tax
impact and property value (Reed et al. 2010).
As per a review conducted by Biermanand Smidt (2007), the value appreciation
remains a prominent reason for the businesses to purchase commercial property. In this
context the author’s further note that the purchasing of commercial land allow an owner to
not pay the month to month credit instalments for rent, or a yearly/ period based instalment
for lease, and hence have better financial savings. This allows the business to not only focus

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on the management of their operations, rather also allow them to incur cost in case of the
failure of endeavour, or in case further expansion is required.
Since, business that purchase commercial land ordinarily are expected to use an
average of51% of the commercial space, the rest of the space can be rented out, which further
improve the value model of return from investment for the owners (Zeller et al. 2015). Tax
benefits and control over the property are other benefits of the purchasing of the commercial
land. However, there are some disadvantages of buying commercial real estate as well. In
their review, Biermanand Smidt (2007), notes that commercial property is a hard asset and is
subsequently an illiquid asset. Thus, when purchase commercial land they would be expected
to pay higher forthright costs when contrasted with renting commercial land. Expanded
Liability is another challenge of owning a commercial property, which will further increase if
the property is rented to some other business/ individual as well (Zeller et al. 2015). While
asset appreciation remains a constant motivation for most buyers, the possibility that asset
can really decrease in its value and the business will incur the cost of the loss also remains a
consideration (Brealey, Myers and Allen, 2009). Other challenges with the purchase of the
property includes the lack of flexibility, and limitation of moving in case neighbourhood
changes in the market becomes evident.
There remains benefits in leasing a commercial real estate property, especially when
the business seek higher liquidity of the assets. As per a report by PWC (2016), often when
entering a new market the focus of the business is to establish themselves. At that time the
stress of owning a property and tying assets can be a challenge. However, through the
management of the commercial property by taking lease the business can have a better option
of managing their operations, and limit their distractions. The limited maintenance charges,
reduced property upkeep amount and other unforeseen costs can contribute towards
improvement of the operations for the business. All these variables contributes towards

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business flexibility as well, even if the business is not supported in terms of asset
development (Biermanand Smidt, 2007).
The research reflect that there is merit in defining the type of purchase/ lease option
the business seeks on the basis of their business models and goals. As per Ziemer et al.
(2015), each business is different, and they each have their individual expectations from their
operations, funding and market considerations. All these aspects need a tailored identification
of the business goals, and aligning the same to the purchase decision for the business. As per
PWC (2016), there is no right or wrong answer when considering purchasing or renting or
leasing a property. Rather, the factors to be taken in account includes, the market challenges
and benefits, and based on the estimated impact of these variables on the business model, the
decision to opt for a commercial property needs to be taken. In the present context, the focus
will be to discern the needs of the BT group, and align the same with the market conditions
and real estate variables in the Amsterdam market (McGegor, 2017). The aim is to provide
the best decision option with higher return of investment and asset stability and security for
the company in this commercial property acquisition decision.
Methodology
Research questions and aims
The focus of the research will be to discern the needs of the business, and align it to
the commercial real estate market in Amsterdam. The research further will provide an
analysis of the market to provide long term impact of the decision on the business model.
1. What are the commercial property needs of the business
2. What are the market challenges for real estate purchase/ lease in Amsterdam market
3. What is the anticipated impact of the real estate decision on the business model of the
company

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Research approach
The focus of the research is to discern that the challenges of the commercial real
estate market in Amsterdam, and thus make an informed choice option for BT group. For this
reason the use of secondary resources, such as market trends of real estate availability, selling
rates, buying rates expectations, tax provisions for foreign investors, opportunities for
renter/property buyers in the market and such will be studied with the review of the
secondary resources and literature analysis. For this reason the use of inductive research
approach will be adopted. In the present context, there is no defined observation regarding the
market trends, and hence the use of inductive approach will allow the researcher to audit the
market details and provide conclusive and tailored observations to the client (Daniel and
Sam, 2011).
Findings
Project considerations (renatal advice)
Client needs commercial space of 10,000 sqm within the Amsterdam Zuidas Business
District or in the immediate area around Schiphol Airport. The client is not limited by the
type of space, and is fine with self-contained, or multi-occupied building. However, they
need branding rights on the outside of the building, as this is a part of their commercial and
corporate business model. The client needs a building that project a corporate quality
impression, and wish to have a lease of 10 year on existing buildings, with an option to break
at the end of the 5th year. The client is also open about the procurement of a new building, or
acquisition of the bespoke building with refurbishment options. However, the business needs
sustainable business solutions. The parking ratio needs are at least 1 space per 250 sqm with
easy access via public transport.

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Project options
A vast majority of land in the region is owned by the municipality, and hence the land tax
is high on the property, and the patrons are expected to pay ground rent. Since, the person
buying a building does not buy the ground on which the building reside, they sign a lease for
the right to use the ground (Altes, 2018; OECD, 2017). The rent for office building is higher
and the city centres has a high ground rent as well. In considering the renting options as a
choice of business expansion in Amsterdam, Savilis (2019) notes that Amsterdam expects a
rise by 4 percent in the rent rate in the coming years.
As per a report by Knight Frank (2015), the availability of property in the southeast
district and the Sloterdijk in Amsterdam will remain high. The trends of office rate are further
shared for consideration,
District Rental range
Amsterdam centre 145 – 320
Amsterdam Sloterdijk and Amsterdam West 100 – 175
Amsterdam south 230 – 375
Amsterdam southeast 110 – 195
Source: Knight Frank (2015)
Plan justification
While the southeast and south axis remains a popular choice for commercial property,
take up remained focused on the existing property, and number of new buildings were less.
The value of availability of the space also decreased in the Amsterdam centre as per Knight
Frank (2015). As per Dynamis (2018), small square take-up in the country has remained
constant at 39.050. However, here the maintenance of expenditure for energy cost remains a,

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Zuidas (Amsterdam) has a rent range of € 350 to € 450 per m2, and the office supply in the
region has dropped by 17% (Dynamis, 2018). The supply of 1.019 was noted in 2018,
however, an increase in the market share of commercial estate, especially business has been
evident with a rise of 7%. However, these aspects should not impact the behaviour of
investors owing to the new interest schemes for business ventures in the country, and as per
the reformed guidelines EMA’s premises model for making space available for offices in the
region (Dynamis, 2018). The mandatory energy conservation grade entails that the quality of
the land will be higher over the years, and appreciation of the property will be evident.Lack
of initiative to define the laws for partially vacated land in the property makes the challenge
of renting out further to other immigrants a challenge in terms of the management of the
obsolete property (Dynamis, 2018). The Supply development in Zudais region for the country
is at present 134.550.This particular region offers location-specific advantages in terms of the
availability of suitable space, presence of multi-year rental/ lease contract, as standard
practice in the market.
Discussion
In the present case the relevance of renting a commercial property in Zudais is
advocated for the company. The business venture opportunities and the increased flexibility
of the operation in the present context offer high opportunities for the business. It is further
noted that the presence of energy conservation model in the region and the option of tailored
allocation of the resources allow increased growth opportunities for the business in this
region (Jadevicious and Houston, 2014). Even as the supply of the renting facility is limited
in the market, with the right connection this challenge can be overcome, and the opportunities
for the business will increase.

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Conclusion
While considering the success of any commercial property venture, it is important to
understand the limitations of the land, the property type for financial and business reason and
further develop an effective framework of needs, requirement and market analysis. In the
present context the business need of BT group aligns with the renting in Zudais region in
Amsterdam. The period of the renting can be based on the decision of the mutual partners.