Dutch Municipal Real Estate:
Assessed Value As Foundation for Market Value?
A. van den Beemt-Tjeerdsma MSc
1and J. Veuger
BSc MRE PhD FRICS
2 Contact: j.veuger@pl.hanze.nl1 PhD- candidate Hanze University of Applied Sciences Groningen, 9747 AS, NL
2 Professor Public Real Estate, NoorderRuimte, Centre of Applied Research on Area Development, Hanze University of Applied Sciences Groningen, 9747 AS, NL.
In The Netherlands, the Real Estate Assessment Act regulates the yearly appraisal of all Dutch real estate. Municipal real estate is a sizable, and thus important, segment of this real estate market. This results in assessed values that are used for official purposes and taxes. The Dutch municipalities also use these assessed values for their budgeting plans and in their considerations concerning their real estate portfolio (e.g. disposal). The act provides quality requirements these assessed values have to meet. One of these
requirements is that the appraised value corresponds with the market value of the real estate objects.
In the last 40 years, little was published on municipal real estate while increased transparency is desirable. Therefore, this research aims to contribute to this increased transparency by giving insight into trade trends of CRE as well as showing ratios between assessed values and market values.
Trade trends were analyzed as well as ratios between assessed values and market values. In order to improve data quality and reliability, transactions were indexed, ratios calculated and outliers removed. Results show that the amount of transactions increased between 1987 and 2014 and that the municipal real estate market is more volatile than the Dutch housing market. No relationship was found between economic growth and the number of transactions. When it comes to the values of municipal real estate, it appeared that the assessed values are not in line with the market values (transaction prices). From 1999 the market value even exceeds the assessed value.
Given these results, Dutch municipalities should reconsider whether the assessed value should still be an indicator of the market value of their real estate portfolio and whether it can serve as a basis for their budgeting.
