Real Estate in Belgium Stable and Less Prone To Speculation
Article: There is strong demand in the commercial property market in Belgium.
Brussels is less expensive than central Paris or London but, nevertheless, the inner city can be pricey, and areas such as the European District and NATO / Woluwe are expensive but popular.
Brussels is both the capital of Belgium and, for all intensive purposes, the capital of the European Union. It has also become a center for many international organizations, such as NATO, as well as a number of embassies and consulates. The relatively high prices in the real-estate market in Belgium reflect this situation.
- There are no restrictions on the purchase of property in Belgium by foreigners and so expats who stay for more than 1 year could consider buying an apartment or a house.
- Prices have fallen after a dramatic rise of over 80% since 2000 and are now stable.
There has been a particular focus on the retail and the residential markets where volumes have doubled.
Rows of traditional flemish houses near the canal in Bruge, Belgium
The commercial property market
Strong buying interest from domestic and international buyers for prime commercial assets is expected to continue in 2013.
Investors are expected to increase asset allocations to Belgium real estate because yields are attractive when compared to the neighboring countries.
- Prime yields are at about 5.75% for shopping centers and around 5.35% for office buildings with long leases – according to investment consultant Savills.
- The consultant also says that the market registered a 38% increase in 2012 in comparison to 2011 with a total volume of over EUR €2 billion compared to EUR €1.7 billion.
- Savills also reports that local investors account for over 70% of the market, although investors from the UK and Germany are also active
- The largest deal in 2012 was the purchase of Zuiderpoort in Ghent by the Abu Dhabi Investment Authority.
The occupancy in the Brussels office market in 2012 touched 348,000 m² compared to 325,000 m² in 2011.
- Corporate entities accounted for 74% of this occupancy followed by 20% for European Union administrators.
- Prime rents in the Central Business District showed a slight increase to EUR €300 per square meter/year
- The average rent for the city as a whole grew 1% to EUR €155 per square meter/year.
- Though both are expected to remain stable in 2013, the gap between primary and secondary buildings continues to grow.
- A lower level of completions in 2012 combined with stable demand has put some upward pressure on rents and the vacancy rate has declined to just over 8%.
Residential real estate
- Depending on the location, a studio or 1-bedroom apartment is reasonably priced and house prices start at 30% higher.
- A large, period town house (maison de maitre) in the centre, or a high-end detached property with gardens in an elite residential area (like Ixelles), will be out of reach for most people.
- Costs are high though local law sets solicitors’ fees. Expect to add processing fees as well as a registration fee of 12.5% of the value of the property.
- Once executed, the exclusive purchase option is not binding – but the compulsory purchase agreement is.
The bottom line
What is happening in Belgium is not a property boom but may be more accurately described as a continuous increase in price. The high taxes applicable to capital gains on properties sold before 5 years means that the market is relatively stable and less prone to speculation.