According to Savills latest office report, aggressive investors will be paying 5-5.5% yields in 2012 to secure the longer term lets in Brussels. This reflects the scarcity of such stock in the market, and a decline in 10-year interest rates from 5.84% to 4.14% at the end of 2011 due to the formation of a new government and the implementation of new fiscal measures.
The international real estate advisor suggests that the major players in the Brussels investment market continue to be institutional investors, accounting for 33% of acquisitions in 2011, followed by Belgium Sicafis at 24%. The overall investment volume for 2012 is anticipated to remain steady at 2 billion following a strong finish to 2011 in which volumes reached 1.7 bln. 33% above 2010.
Gregory Martin, Managing Director of Savills Belgium, comments: "In a weakening macro-economic environment where interest rates are heading downwards again, we are expecting investors to become more aggressive on long-term let assets."
Savills report states that despite a lack of activity from Belgian and European administrations in the lettings market in 2011, as well as cautious behaviour from corporates, overall take up reached 316,090 m² in line with the levels observed in the last two years. The majority of lettings at 62% took place in the CBD. The market also witnessed an increase in prime rents to 275 m²/year up from 260 m²/year in the Leopold district as well as a rise in the number of transactions above 1,000 m² at 28 lettings in total up from 65% compared to Q4 2010.
Julie Depierre of Savills research adds: "With few developments set to be brought to market this year, we anticipate a further fall in vacancy with take up at similar levels to 2011."
Office stock in the Brussels market now stands at 13.5 million m² with a vacancy rate at 11% and, according to Savills, is not estimated to fall significantly in 2012.