Belgian investment market driven by Retail sector, while office lettings remain stable
The retail sector is driving investment in Belgium, accounting for 50% of the ?553m total investment volume recorded in the first quarter of 2012, according to Savills. The firm notes that major retail transactions this year include the purchase of retail gallery Toison D’Or for ?62 million by Prupim and the Westland Shopping Centre acquired for ?80m by AG Real Estate.
Savills research indicates that overall, the Belgian investment market performed well in Q1 2012, reaching the same level as recorded in Q1 2011 and 32% above the previous quarter with Brussels accounting for 37% (?191m) of investment turnover. Office turnover was lower than usual, at ?99m in Q1 2012, however Savills expects this to improve as the year progresses and notes that investor demand for well let prime offices remains strong.
Gregory Martin, Managing Director at Savills Belgium, says: “We have seen a good start to the year in the investment market, especially in the retail sector due to the availability of products meeting investor requirements and institutional investors choosing to diversify their portfolios with retail assets. We expect the market to broaden into offices later in the year.”
When assessing the Brussels office market, Savills found that just 90,000 sq m of new development is scheduled for completion in 2012 of which most is located in the CBD. The firm also expects the vacancy rate, which currently stands at 11%, to remain stable over the coming months.
In terms of take-up in the city, Savills data shows that this reached 95,168 sq m in Q1 2012, compared to 115,224 sq m in Q1 2011, with 65% of this (62,291 sq m) taking place in the CBD. The EU administration accounted for 36% of take-up with a single pre-let of 24,463 sq m in the new Square Orban development in Brussel’s Leopold district. Prime rents in this district stand at ?290/sq m/year, representing a 2% decrease from Q1 2011. Overall prime rents across Brussels stayed in line with 2011 levels except in the periphery where they decreased by 15% due to high vacancy rates which favoured occupiers.
Julie Depierre, Head of Research Savills Belgium, says: “Some businesses are still cautious and postponing office relocations but now that the political deadlock has ended we expect to see more letting activity on the Brussels office market, particularly from the Belgian administrations.”