Investment in Belgian commercial property delivered a 3.4% total return last year, according to the IPD Belgian Property Index, despite a modest -2.6% capital depreciation which reflected sector-wide yield expansion and rental falls. While the annual capital depreciation is double 2008's -1.3%, the value write-downs are still much shallower than many European countries.
Compared to its near neighbors, Belgium's capital decline was identical to Germany, at -2.6%, and shallower than both France and the Netherlands, which fell by -7.1% and -5.8%, respectively. Belgium's mild capital decline, together with a solid 6.2% income return, helped deliver positive annual total returns, at 3.4%.
Capital depreciation in the office sector although weaker in 2009 was still driven by increasing yields and continuous decreasing rental values at - 0.9% The industrial sector, which fells by -7.1%, was protected from delivering negative total returns by a high 8.0% income return. All major Belgian property segments delivered capital depreciation. After industrials, greater central Brussels offices fell most severely, at -6.2%, with the mildest fall in provincial Belgium office market, falling by -1.3%.
Sébastien Rennotte, Country Manager Belgium at IPD, said: "While capital values fell further in 2009, the write-downs remain relatively modest with strong income returns sufficient to maintain positive annual investment returns for investors. Indeed, the Belgium property market has delivered positive returns over the last three years." The total value of the 344 properties covered by the IPD Belgium Annual Property Index was 7.9 bln. at December 2009 which represents an increase of 23 % in value compared to 2008.