Belgium Property News

Belgium investment set to outperform 2011 volume, while Brussels office market remains stable

Savills latest research report on the Belgium commercial property market records total investment turnover in the first half of 2012 at ?1.1 billion, already representing 78% of the total volume achieved in 2011 (?1.5 billion). Furthermore, the international real estate advisor predicts that total turnover for 2012 will reach approximately ?2 billion, which is an increase of 33% on the figure achieved last year.

On a year-on-year basis, the firm notes that at ?533 million, the Q2 12 total investment volume in Belgium was up 37% compared to the same period in 2011 with retail remaining the market driver, accounting for 35% of turnover. The office sector saw an increased level of activity in Q2 12, making up 34% of total investment volume, from 32% in the previous quarter.

According to Savills research private investors accounted for the highest portion of turnover, at 27%, followed by Belgian REITs (16%) and institutional investors (15%). Domestic players dominated the market, making up 55% of transactions, a trend that Savills anticipates will continue.

Gregory Martin, managing director at Savills Belgium, says: “Many transactions which have been delayed due to new tax measures should close during the second half of 2012 and into 2013 and we therefore expect investment levels in the office sector to see an increase in H2 compared to H1 2012. In the office market segment many international investors adopted a wait-and-see attitude during H1 2012 despite Belgium releasing a sound set of macroeconomic data compared to some other European countries.”

Looking at the Brussels office market, Savills records take-up in Q2 2012 at 81,500 sq m (877,259 sq ft), 78% up on Q2 2011, with the H1 total at 234,000 sq m (2.5m sq ft) in line with the 10-year average. The firm expects take-up to reach 350,000 sq m (3.7m sq ft) by year end, keeping it on a level with the last three years.

Julie Depierre, head of research at Savills Belgium, says: “The office market in Brussels has remained stable throughout H1 12 and continued occupier demand, combined with a lack of new developments in 2012 have maintained the city’s office vacancy rate at 11%.”

According to Savills research half of Q2 2012 letting transactions in Brussels, amounting to 40,400 sq m (434,862 sq ft), took place in the CBD. The Periphery district was also active, accounting for 33% of transactions, while the Decentralised district share of take-up decreased to 17%. Corporates were the major players, accounting for 68% of Q2 take-up, although the two largest lettings in the second quarter were a 10,000 sq m (107,639 sq ft) pre-letting in Belair building to the Belgian administration and European Parliament’s letting of 5,167 sq m (55,617 sq ft) in Science-Montoyer.
In terms of rental levels, the gap between prime and secondary locations has widened since the start of 2012, however prime rents in Brussels have stayed in line with 2011 levels, currently averaging at ?290 per sq m/year. Savills expects these to remain stable in the second half of the year.