M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2020
YoY Chg
12-Mo. Forecast
Overview Economic data suggest that the post-lockdown rebound had been slightly stronger than expected earlier this year. GDP was revised up slightly to -7.8% in 2020, up from -8.7% previously estimated. The economy is expected to rebound in 2021 with an economic growth of 5.6%, with risks and uncertainties on the downside. Concerns about unemployment, however, remain high, putting pressure on consumer spending. Furthermore, total output and employment are not expected to return to pre-crisis levels before 2022. The unemployment rate, expected at 6.1% by the end of 2020, is forecasted to increase to 6.9% in 2021. CPI is expected to remain low at 0.8 in 2020 and 1.9 for 2021.
172K Take-up sq m (YTD)
165 Prime rent, (EUR/sq m/year)
Occupier focus
5.50%
As far as take-up was concerned, Q3 was one of the regional markets’ least memorable quarters in past years with a total of 50,000 sq m – 44,000 sq m in Flanders and 6,000 sq m in Wallonia. Nevertheless a handful of notable occupier deals were recorded – all in Flanders, led by Colruyt Group’s own occupation purchase of the former Thomas Cook offices in Ghent - a deal that is symbolic in terms of some of the economy’s winners and losers of recent times (a food retailer as the former and a travel agent the latter in this case). As far as prime rents are concerned, stability is the name of the game with levels of EUR 165/sq m/year recorded in Antwerp, followed by a level of EUR 160/sq m/year several areas of both Flanders (Ghent) and Wallonia (Liège, Namur)
Prime yield (3/6/9 lease)
ECONOMIC INDICATORS Q3 2020
Investment focus YoY Chg
-8.7% GDP Growth Belgium
6.1%
12-Mo. Forecast
Q3 saw the largest total transacted volume in over a decade in regional markets, with EUR 371 million, bringing the total for 2020 after three quarters to EUR 463 million. Some long awaited deals involving prime assets have been confirmed, namely the purchase by AG Real Estate of several buildings at Post X in Antwerp (+- EUR 275 million), as well as Union Investment’s acquisition of the Diamond in Ghent. The latter deal proves specific types of assets in regional markets can attract interest from international players.
Outlook
Belgium Unemployment Rate
Several pieces of evidence point toward a further expected compression of the prime yield to 5.25% by the end of 2020 after which no further changes are forecasted in the near-term. Prime rents are not expected to increase beyond EUR 165/sq m/year overall within the next 12 months.
0.8%
TAKE-UP, SQ M
Belgium Consumer Price Index Source: Oxford Economics
INVESTMENT VOLUME PER REGION, EUR M
400,000 300,000 200,000 100,000
600
30
500
25
400
20
300
15
200
10
100
5
0
0 2016
2017
Flanders regional markets
2018
2019
Q1-Q3 2020
Wallonia regional markets
0 2016
2017
Flanders regional markets # deals (RHS)
2018
2019
Q1-Q3 2020
Wallonia regional markets