Belgian commercial real estate delivered mild capital depreciation over 2008, at -1.2%, according to the IPD Belgium Annual Property Index. Income returns over last year were robust, falling just 10 basis points to 5.7%, contributing to an annual total return of 4.5%.
The all property capital growth average for 2008 would have been weaker was it not for the resilient Retail sector, at 4.4%, supported by strong capital growth at Shopping Centers segment level, at 5.2%. By contrast, Industrial and Office sectors
delivered capital growth of -3.6% and -3.0%, respectively.
Each of the five Office segments delivered negative capital growth, most significantly was in the Rest of Central Brussels segment, at -4.9%, followed by Anvers, at -4.3%. Suburban Brussels, Rest of Belgium and Brussels Central Business District the delivered -2.7%, -2.3% and -2.0%, respectively.
All property initial yields moved out by 10 basis points, ending the year at 6.3%. Annualized total returns over three and four years, the full length of the index, was 7.6% and 7.3%, respectively. By comparison with other asset classes, Belgian real estate outperformed equities and property equities, which returned -51.7% and -15.4%, respectively, while performing in line with bond markets, at 4.5%, according to the JPM GBI 7-10 Years Index.
Enguerrand De Fontaines, Belgium Country Manager at IPD said: "For the first time in the index's four-year history, there is negative capital growth in all principal segment levels except Retail, while Shopping Centers growth is considerably down
on 2007's 10.3% capital growth.
"Belgium is one of a number of European property markets including Germany, Switzerland and the Netherlands for which capital values are falling from a much lower base. The influence of income returns is consistent throughout Europe with
stable levels supporting overall positive total returns."