Investment activity increases four-fold in Brussels boosted by German funds (BE)

Investment activity increased four-fold in Brussels during Q309 compared to Q209, according to Savills. Foreign buyers, in particular German funds, re-entered the market but domestic investors still held majority share.

The international real estate advisor recorded €142 million transactions in the past quarter in Brussels including Real I.S's purchase of Ernst & Young HQ from Segro for around €35 million, and IVG's purchase of Estuary Properties N.V the owner of the multi-let building on Rue Idalie 9-13 in the EU district for below €15 million. Despite the figure representing a 62% decrease year on year, the quarter was exceptionally active. Foreign purchasers represented 23% buyers, having been inactive in the previous quarter, with French buyers accounting for 2.5% market share, Dutch representing 7.7% and German funds at 10.3%.

CBD prime yields currently stand at 6.75% for 3/6 year leases and at 6.0% for 9+ year leases. Savills predicts a lack of prime assets could see yield compression for top tier prime assets at sub 6%.

Sheelam Chadha, head of research for Savills Belux, says: "Although some key deals this quarter should re-ignite confidence in the investment market, the lack of prime assets could see some keen players competing, which could even cause some yield compression in the top-tier market. However, overall market conditions will not improve much more until 2010."

Despite a small flurry of activity in the investment market, Savills reports that office take-up declined by 51% compared to Q308 with 52,916 m² (569,601 ft²) leased, and an overall decline of 51% when comparing the first three quarters of 2009 to 2008. Vacancy rates have risen to 11.5% due to weak demand, and prime rents were down 5.45% compared to H109 at €260/m²/year, nevertheless Savills says some tenants are still finding difficulty securing high quality space in key locations.

Source: Savills

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