Savills predicts increased transaction volumes in Belgium office investment marketAccording to research from Savills, transactions volumes in the Belgium investment market are expected to be strong for 2014 with approximately ?1 billion worth of assets currently in the market and several large deals already completed including North Galaxy, Onyx, Motel One and Kievitplein. Savills advised on the later, which sold for circa ?200 million. Whilst the firm notes that total Q1 transactions were down on last year, it predicts that overall investment volume in Belgium during 2014 should pass the ?2 billion mark.
Gregory Martin, managing director of Savills Belgium, comments: “Whilst transactions volumes were down year on year in Q1 2014 by 38%, we do expect a stronger pick up for the remainder of the year as two large deals have already closed in May and several transactions that are currently in the pipeline should happen in the next few months.”
Savills research finds that private and institutional investors remain the most active in the Brussels market at 29% and 27% of total turnover, respectively. Domestic investors were involved in half of all deals with German, US, UK and French buyers all active in Q1 2014 as well.
Savills reports that prime office yields, which currently stand at 6% compared to 6.25% a year ago, could contract further in the coming months due to demand outstripping supply and current low Belgian LT interest rates.
Jeremy Lecomte, head of research at Savills Belgium, says: “With market activity gradually accelerating we should see economic growth of approximately 1.3% in 2014, although this is dependent on several factors including the upcoming May election. This improved economic outlook will translate to the investment market if it is also coupled with increased occupier demand.”
The research states that vacancy currently stands at 9.5% in Brussels and should keep falling in central districts due to a low completion level and reconversion of obsolete office buildings into residential. As demand is mainly focused on new space, the quality of vacant offices may continue to deteriorate.
Due to the lack of large transactions during Q1 2014, take-up in the Brussels market reached only 76 sq m, 34% below Q1 2013. Savills expect this year’s take-up to be boosted by Actiris pre-letting the Astro Tower and the Flemish administrations looking for 40 sq m of new offices in the north district.