BELGIUM
Retail Market Snapshot Fourth Quarter | 2018
Overview
MARKET INDICATORS
GDP growth in Belgium weakened to 1.4% in 2018 and is forecasted to slightly increase in 2019 to 1.5%. The unemployment rate is at 6.3% and is expected to remain at this level throughout 2019. Interest rates are also expected to remain unchanged, at least up to the end of 2019 as announced by the ECB. Consumer confidence could weaken in the coming months as geo-political uncertainties are rising.
Market Outlook Prime Rents:
Under pressure in tier 2 cities, though remaining stable in top locations and/or assets
Prime Yields:
Yield compression ended in 2018. 2019 should be on the stabilisation, though some locations could experience a slight increase during the year. Shrinking development pipeline as a result of rising vacancy levels; future new supply also hindered by restrictive planning laws. Demand witnessed record level in 2018. 2019 should see a decrease of the activity, both on the occupational and investment market.
Supply: Demand:
Occupier focus
Prime Retail Rents – December 2018 HIGH STREET SHOPS
€ SQ.M YR
US$ SQ.FT YR
GROWTH % 1YR 5YR CAGR
Brussels
1,850
200.6
0.0
Antwerp
2,000
216.9
2.6
2.1
Liege
975
105.7
-13.3
-2.4
Ghent
1,300
141.0
-5.5
-3.5
Bruges
1,025
111.2
-6.8
-3.1
Hasselt
1,125
122.0
-10.0
0.5
€ SQ.M YR
US$ SQ.FT YR
Brussels
160
17.4
-5.9
-1.8
Antwerp
165
17.9
3.1
1.9
CURRENT Q
LAST Q
LAST Y
10 YEAR HIGH LOW
Brussels
3.15
3.15
3.25
5.25
3.15
Antwerp
3.15
3.15
3.25
5.25
3.15
Liege
4.75
4.75
4.65
6.00
4.65
Ghent
3.95
3.85
3.75
5.50
3.75
Bruges
3.95
3.95
3.95
5.50
3.95
Hasselt
4.65
4.65
4.65
5.75
4.65
CURRENT Q
LAST Q
LAST Y
10 YEAR HIGH LOW
5.25
5.25
5.25
6.50
5.25 5.25
OUT OF TOWN RETAIL (STAND ALONE RETAIL UNITS)
0.5
GROWTH % 1YR 5YR CAGR
Prime Retail Yields – December 2018 HIGH STREET SHOPS (FIGURES ARE NET, %)
OUT OF TOWN RETAIL (STAND ALONE RETAIL UNITS) (FIGURES ARE NET, %) Brussels Antwerp SHOPPING CENTRES (FIGURES ARE NET, %) Country prime
5.25
5.25
5.25
6.50
CURRENT Q
LAST Q
LAST Y
10 YEAR HIGH LOW
4.10
4.10
4.25
5.50
4.10
NOTE: Volumes below €25 million may result in sharper yields, approx. 50 to 100 basis points. With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.
Occupier activity recorded impressive results during H2, with more than 165,000 sq m of take-up recorded over the last quarter of the year. As a result, the year 2018 ended on a record 431,000 sq m of take-up. 50% of the take-up was recorded in the out-of-town sector during 2018. However, the rising competition of e-commerce and growing disparities between tier 1 and tier 2 locations weigh on the retail sector, especially on the rental levels and the vacancy rate. Indeed, if prime rents are stable in Brussels and Antwerp, they are on the downside in many regional cities. For larger shops rents are clearly decreasing, even in the top cities Brussels and Antwerp. The vacancy rate is on a slight increase, though showing very different dynamics between top locations which continue to attract retailers and secondary locations or secondary cities which are more and more struggling. In some peripheral locations, the vacancy rate is to be found around 30%.
Investment focus
On the investment market, 2018 ended on a very positive note with more than EUR 1.8bn invested in Belgium, the second best year ever recorded. The sales of three shopping centres and of several important portfolios boosted the share of the retail sector to an impressive 40% of the total invested volumes in commercial real estate in Belgium. Prime yields remain stable in most of the core locations, though we observed a slight increase in Brussels in Q4.
Outlook
2019 will be challenging on the retail market as growing (online) competition, political uncertainties and rising interest rates will raise important issues for retailers, owners and investors and a need to adapt to new consumers’ habits.
This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. ©2018 Cushman & Wakefield LLP. All rights reserved.
Jean Baheux
Head of Retail Agency Belgium Avenue des Arts 56, 1000 Brussels Tel: +32 2 546 0861 jean.baheux@cushwake.com cushmanwakefield.com