Why Amsterdam is poised to be Europe's next global city
One of Europe's growing creative, financial and technology hubs, Amsterdam is rapidly building a name for itself on the world stage.
One of Europe’s growing creative, financial and technology hubs, Amsterdam is rapidly building a name for itself on the world stage.
Government policy that prioritizes smart, sustainable development and supports local and foreign business has seen Amsterdam flourish in recent years, while its multiculturalism and liberal lifestyle continues to attract visitors and expats alike.
“In the past, Amsterdam was considered a relatively small local city, but now it is building up scale to become a global city, which is attracting overseas interest and investment,” says Sven Bertens, Head of Research Advisory, JLL.
Compared to other European world cities, Amsterdam’s 219 square kilometer city proper is small in size, with 850,000 residents to Paris’ 2.3 million people in 105 square kilometers of its central area. But as the hub of the Holland Metropole, a region consisting of the Netherlands’ four biggest cities sharing resources and transport infrastructure, Amsterdam reaps the advantages of being an hour or less away from the diversity and talent base of The Hague, Rotterdam and Utrecht – not unlike the way in which the boroughs of London or the arrondissements of Paris are coordinated, Bertens notes.
Welcome to businesses far and wide
The Dutch government has played a key role in creating a business-friendly environment, nurturing a vibrant start-up culture and providing numerous funding opportunities for small businesses to scale up. Its StartupDelta partnership connects companies with incubator and accelerator programs, while an immigration law passed in 2015 created a special visa class for startup entrepreneurs from outside the Netherlands.
“It’s very easy to do business here,” Bertens says. In 2016, 157 foreign companies set up shop in Amsterdam, while Tesla, Netflix and Uber recently opened local headquarters.
Just a few years ago, office vacancy rates exceeded 20 percent, Bertens says; today, the office market is saturated and rental costs are climbing, as technology and creative companies clamour to lease space.
“We have a very good political and business climate. The tolerant Dutch culture and openness of Dutch people make it very easy for companies to relocate, and their expat workers to feel at home,” Bertens says. The local workforce is also highly skilled and multilingual, with many citizens educated to postgraduate level, and most speaking English, Dutch and a third language.
Foreign investment takes off
For a growing number of overseas investors, the Netherlands is a popular gateway into European markets. “Ten years ago, real estate investment was driven by Dutch capital,” Bertens says. “Now, the majority of real estate investment in the Netherlands comes from overseas. Investors see the opportunity and strengths in the Dutch market.”
The local logistics industry is entirely funded by foreign capital, while the commercial office market is supported by a very high percentage of overseas investment. As consumer spending rises, foreign investors are also sinking capital into the retail sector.
“What we are seeing in the retail market is similar to the trends of the office market three or four years ago,” Bertens says. “Consumer confidence is picking up and there’s a positive impact on retail, particularly inner city retail.”
Amsterdam’s clout as a finance city is also growing – and with excellent digital connectivity, an emerging fintech sector and the use of English as the language of business, Amsterdam is one of the frontrunners to challenge a post-Brexit London as the capital of European finance.
Smart and sustainable
As cities across the world grapple with the downsides of rapid development, Amsterdam, with its long-held focus on sustainability and smart infrastructure is increasingly poised to define how a 21st-century world city operates.
“The attractiveness of Amsterdam is that despite it reaching the stage of a global city, it feels like a small village,” Bertens says. “Housing is still relatively affordable and the city has beautiful architecture.”
Residents can get across the city and to the airport in about half an hour using the well-developed public transport system, while an entrenched bicycle culture has helped minimize traffic. Though air quality has suffered, recent city policy will see an increased focus on managing carbon emissions, including through the use of electric vehicles, with the focus on the health of its citizens. By 2020, 92,000 more households should be using local, sustainable electricity, while by 2026, all buses will be emissions-free.
Amsterdam has also pioneered the collaborative economy, with investments into meal- and asset-sharing plans that benefit its lower-income residents. As the city takes its place on the global stage, its progressive strategy for good urban living could influence other fast-growing cities to take a similarly sustainable path.
Developing for the future
Yet some of Amsterdam’s greatest assets have contributed to its rising challenges. The boom in business coupled with its walkable size have squeezed the property market for both residential developments and offices.
“Office vacancy is at such a low rate we potentially cannot accommodate large occupiers, while there is also a large shortage of residential units,” Bertens says. “The city needs to grow. But the municipality has a good strategy in place for the coming years.”
A new metro line connecting the north and the south will help expand the current office and residential markets in Amsterdam-Noord and along the waterfront. Amsterdam also has a history of innovative housing solutions, including self-build homes and low-cost community housing for youths and refugees, with plans to reclaim land to build more homes next year.
“The momentum of Amsterdam as a global capital has happened so quickly,” Bertens says. “It will be very interesting to see how city evolves from local market to a global market but it’s got the right groundwork in place to make a successful transition.”