Office investment levels in Belgium increased by up to 205% totalling 430.6 million, comparing Q309 to Q409, and buyers have increased to five per asset compared to one at year end 2008. This demand, according to international property advisor Savills, has seen yields for nine year leases begin to compress from 6% at the end of Q309 to 5.8% today.
The research indicates that H209 investment activity in Brussels was substantially up on H109 by 391%, however when comparing year on year investment levels only reached 363 million in the city in 2009 down 71% when compared to 2008. Whilst quarter three marked a re-emergence of international investment funds looking to purchase prime product, there was an overall decline in activity relating to a lack of long-let product and unwillingness of owners to sell at above average yields. Leases between three and six years have seen yields stagnant at 6.5-6.75%, Savills says investors perceive these assets to be more risky due to a remaining lack of confidence in the short-term rental markets.
Sheelam Chadha, head of research for Savills Belux says: "This time one year ago only one buyer was around for every prime asset with three to five buyers today. Funds which missed their chances in 2009 will need to be quick as competition for the few prime assets is becoming more apparent."
The letting market in Brussels also saw a surge of activity, boosted by confirmation of a 75,000 sq m (80,7293 sq ft) 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 decentralised district increasing by 3.8% to 190 sqm/year during 2009. However prime Brussels CBD rents were quite weak with an average drop of -6.3% whilst top quartile rents fell -1.0%.