The property man

The property market in Brussels, both commercial and residential, has shaken off the 2008 credit crunch and is showing signs of recovery, believes Rod Scrivener, head of valuations at the Belgian office of property firm Jones Lang Lasalle. Belgium, Scrivener, from the UK, has spent the past 23 years casting his expert eye over office investment in the country and also lectures on the property sector at the University of Leuven.

And on the office front, the centre of the European capital has proved resilient, with prices and vacancies returning to pre-2008 levels. “This is a market that is pretty much in balance,” he explains. Stability and balance continue to be key words for the residential markets, too, especially in the established areas where prices are high enough to make new development viable. “There is an excess of demand in the residential market, as there will always be people who want a better home; the question is: can they afford it?”

While a recent report by the Economist questioned the sustainability of Brussels house prices, in fact concluding that they are overpriced by 26%, Scrivener draws on his long experience to refute its claim that prices are likely to fall. “The Economist study compares prices to rents, and indeed there is a very high multiplier, but there are many reasons for this, not least the attractive taxation of income from privately rented property. They also compare prices to average disposable income per person, but this is pretty meaningless in a country of such contrasts. In the case of statistics in Brussels, you have to bear in mind that the administrative boundaries are very tightly drawn and don’t include the rich Flemish periphery to the north.

“If you include the wealthy Brabant suburbs, you get a completely different picture. It is the average family income and 20% unemployment in the Brussels region that skew the statistics. Prices are low compared to Paris, for example, and there is a gulf between comfortable, cosmopolitan Brussels up the hill and a genuinely poor, deprived Brussels in some parts down the hill. It was like that twenty years ago, and it hasn’t changed.”

From the lofty windows of the multinational’s Brussels office in Porte de Namur, a panoramic picture of the two sides of the city is clearly visible: in the foreground the stately Royal Palace neighbours the downtown sprawl that stretches towards the northern gateway of the Koekelberg Basilica.

One blip on the commercial side is the periphery of Brussels, especially the area straddling the ring around the national airport at Zaventem. Overbuilding between 1999 and 2001 led to a lot of empty office space that preceded the economic crash. But the situation is far rosier in the rolling hills of Walloon Brabant. The business zone at Wavre Nord is one of the region’s largest economic hubs, taking advantage of the presence of major companies such as pharmaceutical giant GlaxoSmithKline. Another is Waterloo Office Park: “Probably one of the best office parks in Belgium,” says Scrivener, who recalls, “When the land was originally bought, it was intended for a shopping centre. We were asked by developers Codic for our advice and replied that offices might work, but they should take it step by step.”

Scrivener cites mixed developments such as the Papeteries de Genval by one of his company’s clients, Equilis, as proof of this new optimism. “It’s a big project with lots of apartments and shops, within easy walking distance of the station. New developments such as these are now financially viable, even if the margins are not enormous.”

One factor in this success has been the province’s open-minded attitude to outside investment: “Walloon Brabant has always been very welcoming to foreign businesses and foreigners.” Scrivener is himself a beneficiary of this benevolence as a long-time resident of the village of Rixensart. The father of five is a fan of the local schools and railway links to the capital, which are set to improve with the completion of the high-speed regional network RER. “The main railway line through Genval and La Hulpe is the real dorsal of accessibility to the capital, along with the E411 motorway. The current system suits me very well as there is a lovely Tintin-style railway station at Rixensart with regular trains to Brussels-Luxembourg.”

Scrivener rented for about 12 years before leaping on to the property ladder, only making the decision when he knew he would probably remain in Belgium for the rest of his career. With buying property for investment less attractive now, he believes the length of stay in Belgium is still the most important criteria in deciding whether to buy. The main obstacle to buying, both commercial and residential, is the transfer duty of 12.5%, he says. “For commercial properties it is a well-known fact that the registration duties are nearly always not paid because of the various mechanisms that exist, with the full consent of the tax authorities. Nobody is going to pay 12.5% on a €50 million property, but for residential properties people have to pay.”

He would like to see Belgium follow the French route and reduce the tax to 5 or 6%, which he believes would generate far more income for the exchequer, more liquidity in the commercial market and more movement in the residential market. “This is a huge handicap to buying as you need to be sure you’ll be here for a number of years, so that when you come round to selling the price has gone up by ten or the twelve-and-a-half percent.”

Prices have continued to rise in Belgium, despite a slowdown in the market due to the economic crisis. One reason for this is the low interest rates provided by banks over the past 10 or 12 years, coupled with wage growth and competition between banks. Scrivener believes banks have become more imaginative in listening to their customers and subsequently offer a wider range of mortgages that give people more flexibility. “We now have a more modern mortgage market and while banks are still prudent, they are happy to lend. We have seen none of the excesses in the banking system here that caused all the problems in 2008.”

For expats who are not ready to commit to the local property market, or are not planning on staying in Belgium, the rental market has plenty of affordable opportunities, says Scrivener. While the market has slowed over the past four or five years, with many American companies reducing their presence in Belgium, “you can find good rental accommodation at a fair price”. One exception is the high-end developments, such as in the EU Leopold area, where supply outstrips demand.

This article was originally published in Expat Time, 2013

photo: The Papeteries de Genval in Rixensart by developers Equilis