Belgium’s commercial real estate market is showing signs of life, as office investments more than doubled for the closing quarter of 2009, and nearly quadrupled in the final six months. With international investment funds reentering the picture, and competition increasing, lease activity in Brussels rose sharply from the previous year. See the following article from Property Wire to learn more.
Investment in the office real estate market in Belgium is surging as confidence returns, according to international property advisors.
Office investment levels in Belgium increased by 205%, totaling €430.6 million, in the fourth quarter of 2009, compared with the previous three months, a report from Savills shows.
Buyers have increased to five per asset compared to one at the end of 2008 and the growth in demand has seen yields for nine year leases begin to compress from 6% at the end of the third quarter of 2009.
The research also shows that investment activity in Brussels in the second half of 2009 was substantially up on the first six months, increasing by 391%. But investments are still down year on year, at some €363 million, down 71% when compared to 2008.
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The market is seeing a re-emergence of international investment funds looking to purchase prime products but on the downside there has been an overall decline in activity relating to a lack of long-let product and unwillingness of owners to sell at above average yields, the Savills report shows.
Leases between three and six years have seen yields stagnant at 6.5 to 6.75%. Savills says investors perceive these assets to be more risky due to a remaining lack of confidence in the short term rental markets.
‘This time last year ago only one buyer was around for every prime asset but there are three to five buyers now. Funds which missed their chances in 2009 will need to be quick as competition for the few prime assets is becoming more apparent,’ said Sheelam Chadha, head of research for Savills Belux.
The letting market in Brussels also saw a surge of activity, boosted by confirmation of a 75,000 square meter letting to Electrabel-Suez in the North district. The transaction was one of the largest in over five years and marked a 165% year on year increase in quarterly take up.
Nevertheless in the CBD overall take up was down 37% compared to 2008 with public bodies, who usually account for 65% take up, representing only 16% of the market.
In terms of rents, activity in the outer CBD of Brussels remained strong with prime rents in the decentralized district increasing by 3.8% to €190 per square meter during 2009. However prime Brussels CBD rents were quite weak with an average drop of 6.3% whilst top quartile rents fell 1.0%, the report shows.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.