Belgium: The Real Estate Market In Belgium: A 2022 Guide For Foreign Investors
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- 21 Jun 2022
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Market trends. Property taxes. Inflation rates. Registration fees. These are just some aspects affecting property portfolios. As a foreign investor, buying real estate in Belgium may be a viable way to diversify your portfolio.
But is it a profitable one, especially in the post-pandemic landscape?
Business confidence in Europe's real estate sector is at its highest since 2014. Property remains a favored asset class, forecast returns are higher than last year, and investor demand remains high.
Is the same true for Belgium's real estate market, though?
And if so, how do you go about buying Belgian property? What about taxes and registration fees? Are there exemptions?
We answer all these questions and more below.
Europe's Real Estate Sector at a Glance
Macroeconomic trends and challenges ultimately affect commercial property and housing prices in Belgium. That's why it's vital to understand the European Union economy and property market.
Europe's real estate sector saw remarkable resiliency in the last two years, in large part due to governmental and central bank support measures. As such, sentiment and profitability expectations have recovered to pre-pandemic levels.
Expected Growth Despite Long-Term Uncertainty
According to the Urban Land Institute's and PWC's Emerging Trends in Real Estate® Europe 2022 survey, industry leaders predict relatively strong growth for 2022.
This comes despite long-term uncertainty amid the potential effects of rising inflation, supply chain disruptions, and structural transformation. In fact, cybersecurity ranked as the top long-term concern among respondents-before inflation, interest rate movements, and business interruption, respectively.
Short-Term Industry Concerns
Still, the pandemic's impact on labor mobility and supply chain bottlenecks has resulted in rising construction costs-the primary short-term concern among the surveyed industry professionals.
The availability of suitable assets and land for acquisition and development ranked second. Sustainability and decarbonization requirements ranked third amid rising energy costs and the acceleration of environmental, social, and governance (ESG) issues.
Socio-Political Issues
It's no surprise that environmental sustainability will become a price-determining factor. Socio-political issues concerning the environment, housing affordability, and social equity/inequality were the top three concerns in the category among respondents.
Property Trends: Residential is In-Office is Out
Some subsectors are expected to perform better than others, with residential and logistics properties finding favor among investors.
While operational real estate income profiles and alternatives like data centers, life sciences, and new energy infrastructures are appealing, they won't attract the most capital this year.
These sectors don't currently offer the liquidity most investors require. Rather, they represent a more long-term fundamental shift towards operational real estate.
Unsurprisingly, asset allocations in the retail and office sectors no longer dominate. Divided predictions on whether these sectors will offer flexible prime assets vs. an overall drop in demand remain to be seen.
According to ULI's and PWC's survey, 53% of respondents agree that the year ahead will bring more forced sales of assets in parts of the leisure, retail, and hospitality sectors.
Alternative sectors, value-added real estate, development, and new investment are the top sectors predicted to have access to equity in 2022.
It's All About Location
According to the above ULI and PWC report, Brussels is one of the top ten European cities for development and investment prospects in 2022. It's often perceived as having a young and innovative profile, with robust stock and increased yields despite the pandemic.
Belgium's Property Market: 2022 Trends and Numbers
Belgium's real estate market saw 15% more buildings and 27% more dwellings built since 1995.
According to Notaris.be, spokesperson, Notary Bart van Opstal, property sales rose by 20.4% in the first nine months of 2021-leading to increased housing prices in Belgium.
However, the last quarter saw this trend slow down, resulting in 14.3% overall growth for the year. Opstal says the slowdown cautiously indicates price hikes ending in the "cheapest segment" (typically houses without terraces or gardens).
According to the Belgian statistical office STATBEL, housing prices in Belgium saw the following trends in the third quarter of 2021:
The observed annual inflation rate was 8.2% (a 0.8% increase from the second quarter).
The housing price index rose by 3%.
The median price for a semi-detached or attached house amounted to 245,000 Euros. A detached house cost 350,000 Euros.
Real Estate in Belgium: Regional Trends
According to KBC Economics, homes have almost always been the cheapest in Wallonia and the most expensive in Brussels (since 1973). In 2020, the median price of houses sold in Wallonia was 30.3% lower than in Flanders. In Brussels, it was 8.5% higher.
Here's a quick overview of the housing market in Belgium's primary regions based on STATBEL's and KBC Economics' latest available data (2021):
Walloon
Walloon remains the cheapest region, where it costs 170,000 Euros for a semi-detached or attached house. The median price of a detached house amounts to 280,000 Euros.
House and apartment prices dropped slightly in the first quarter of 2021 (by 0.2% and 0.8%, respectively) compared with the previous year. Hainaut is the cheapest province, and Walloon Brabant is the most expensive.
Flanders
The Flemish Region is the second cheapest. Semi-detached or attached houses cost an average of 274,000 Euros while a detached house cost 380,000 Euros.
2021's first quarter saw house and apartment prices rise by 2.5% and 3.1%, respectively, compared to 2020. Overall, Limburg is the cheapest province, and Flemish Brabant is the most expensive.
Brussels-Capital
This region is the most expensive for all dwelling types, with Ixelles being the most expensive municipality. However, the region experienced a 3.0% decrease in house prices and a 1.9% increase in apartment prices.
A semi-detached or attached house cost 481,000 Euros. Meanwhile, the median price of a detached house amounts to 1.1 million Euros.
Now that you're up-to-date with Belgium's property market, let's take a closer look at buying Belgian real estate. Read More...
