Investment Market Update Q4 2015
Retail investments boost volumes to pre-crisis level
• Investment volumes are back to their pre-crisis level, with more than EUR 4.3bn invested in Belgian commercial real estate in 2015.
• Different factors seem to indicate there will be no return to the issues of 2007 as investors are far more selective and more conscious of risk regarding their real estate investment strategy. Market fundamentals and location are key drivers in their strategies. Furthermore, institutional investors are more regulated than before and less driven by debt.
• As a result, the upside is a more stable and less volatile market. The downside is that most investors are looking for the same kind of assets, leading to a flight to the most secured office assets, the LT Core segment, and record low yields as a result.
• Invested volumes in the retail sector reach a record level, with more than EUR 2bn invested over the year. Shopping centres, main streets assets and out of town retail were sought-after by investors, both foreign and domestic.
• The nursing homes sector is also at a record level, with more than EUR 300m invested. The strong demographic fundamentals, the increasing need for beds and long-term cash flows will contribute to increase investments in the coming years.
• Investments volumes in the office sector were slightly lower than in 2014, mainly due to a slip of huge deals in the beginning of 2016. However the number of deals grew by around 50%.
• Sharp yield compression is observed in every sector. Historically low interest rates and new investors (mainly from the US and Asia) entering the Belgian market increase the level of competition and leading to this compression.