M A R K E T B E AT
BELGIUM REGIONAL Office Q2 2020
YoY Chg
12-Mo. Forecast
123K Take-up sq m (YTD)
165 Prime rent, (EUR/sq m/year)
Occupier focus
5.50% Prime yield (3/6/9 lease)
ECONOMIC INDICATORS Q2 2020 YoY Chg
-8.7% GDP Growth Belgium
Overview Following the heavy economic blow caused by the coronavirus-related lockdown, indicators and surveys confirm activity is now rebounding. In particular, surging expectations in both business and consumer confidence surveys support the view that recovery is underway. Oxford Economics’ GDP growth forecast indicated that the Belgian economy will contract by 8.7% this year followed by a rebound in 2021 when a 7.1% growth is expected. However, subsequent growth (up to mid-2022) will be much more gradual as higher unemployment (forecasted at 6.6% for 2020), subdued external demand, delayed investment plans and a limited fiscal response due to the return of the political deadlock, will slow the recovery.
12-Mo. Forecast
A headline take-up figure close to 63,000 sq m in regional markets was pretty solid during a Q2 which has seen the economy marred by the consequences of the health crisis. Additionally, Wallonia (44,000 sq m) outweighed Flanders (18,000 sq m) in the take-up stakes, which is a rare occurrence. This has been underpinned by large movements in Namur (Wallonia’s administrative capital), with the very long awaited confirmation of the attribution of the Palais de Justice contract to a consortium led by AG Real Estate. The result is a 35,000 sq m pre-letting by the Belgian State. Also in Namur, Baltisse’s AXS project registered a first marquee occupier – Croix Rouge Belgique has agreed to prelet close to 5,000 sq m. Although things have been quieter in Flanders, some large transactions have also been rubberstamped, such as Afas Belgium’s 3,400 sq m purchase in Gate 7 (Antwerp) or a 1,000 sq m letting by Huawei in AA Toren (Ghent). Prime rents have remained stable: Flanders is led by Antwerp (EUR 165/sq m/year), while Wallonia is led by Liège and Namur jointly (EUR 160/sq m/year).
Investment focus Q2 saw the largest total investment volume in a year with more than EUR 88 million invested, including EUR 75 million in Flanders, largely attributable to a landmark purchase by Belfius of MG Business Center in Ghent. The prime yield remains at 5.50%, albeit we continue to monitor it closely due to strong interest in regional office markets.
6.3% Belgium Unemployment Rate
0.4%
Outlook An important decrease in the number of occupational transactions must be taken as a note of caution for what the market holds in store over the coming months. On the other hand, interest in investing in regional markets prime assets is undeterred. TAKE-UP, SQ M
INVESTMENT VOLUME PER REGION, EUR M
Belgium Consumer Price Index
400,000
400
Source: Oxford Economics
300,000
300
200,000
200
100,000
100
0 2016
2017
Flanders regional markets
2018
2019
H1 2020
Wallonia regional markets
0 2016
2017
Flanders regional markets
2018
2019
H1 2020
Wallonia regional markets