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Investment Market Update Belgium Q3 2016

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  • Economic recovery is expected to continue in the coming months in Belgium, though at a mitigated pace. GDP growth should continue at around 1.5% to 1.7% per year while job creation should remain positive despite restructuration processes announced recently. The low interest rates environment is forecasted to continue up to the end of 2017, keeping real estate investments attractive.
  • Investment activity remains high in Belgium. Over Q3, close to EUR 907m have been invested, bringing the total year-to-date to EUR 2.8bn. Existing uncertainties force investors to be more cautious in their decisions. As a result, investment volumes are expected to reach EUR 4bn for the whole of 2016 compared to EUR 4.3bn in 2015, as some significant deals should slip into 2017.
  • The office sector concentrates more than 50% of the total invested volumes since the start of the year, representing EUR 1.35bn in absolute figures. In Q3, the purchase of the retail part of the iconic mixed-use Toison d’Or or the acquisition of the retail park Hydrion by Redevco pushed the retail investment volumes to EUR 680m. Activity is also important in the industrial and healthcare sector.
  • Foreign investors account for 46% of the total invested volumes, coming mainly from Germany, the United States and Asia. In the office sector, their share stands even higher at 75%. These last months, German actors were dominant and the most aggressive with acquisitions such as the Black Pearl (3.8% yield) or the South City this quarter (yield of around 3.9%). In the retail sector, foreign investors are focusing more and more on mid-size high street transactions.
  • Prime yields continue to compress in almost every market sector. New decreases have been recorded in high street retail (3.4% in Q3 coming from 3.5%) and in the industrial sector (6.25% in Q3 coming from 6.5%). Further compressions are awaited in the coming months, especially in the office sector.