Residential market – the challenges and the opportunities
LIVING
The residential market has become increasingly important for developers and investors across Europe. Real estate advisor Cushman & Wakefield has produced a detailed study of trends within this sector and he challenges it faces. In this article we take a look at two (very different) facets of the residential market in Belgium – social housing needs in Brussels and the attractiveness of the Belgian residential market for investors.
Where social housing in Brussels is concerned, C&W starts by saying that at the current time, around 50,000 households are on a waiting list for a social lodging (15% of the Brussels’ population). According to some recent studies, the current rate of the last two years is around 180 new social housing per year. As such, the need could reach 100,000 units by 2040 if the public authorities continue to deliver social housing units at the current pace. Affordable housing (housing accessible to middle-class population under specific criteria) is also a growing need in Brussels.
Public operator Citydev aims to produce more than 200 affordable units on a yearly basis. In order to reach this objective, Citydev concludes partnerships with private operators to develop these specific dwellings. In this context, projects combining affordable housing and classic Private Rented Sector (PRS) tend to be more and more developed. Indeed, as demand is substantial, private players are almost certain to fill in these units while benefitting from some advantages (exemption from paying the so-called ‘charges d’urbanisme’ if the global project includes minimum 15% of affordable housing for example) and thus limiting the risk for the private sector. There is thus a need to create more social and affordable housing in Brussels, not only to stabilize the population but also to answer to one of the biggest challenges of the Brussels-Capital Region to be an inclusive city. Solutions exist, but will require stronger collaboration between the public authorities and the private sector to align interests and objectives.
Moving on to invedtment, C&W asserts that the Belgian residential market is increasingly attractive for investors, including foreign investors.
Investment sales are becoming increasingly numerous, with Covid-19 redirecting national and international investors towards new categories of property. These investors are turning away somewhat from offices and retail to focus more on logistics and in paricular the residential market. Belgium is no exception, even though investors, especially international ones, continue to focus on Brussels and Antwerp only. Investment sales reached new heights in 2021, but for 2022, the investment volume has slowed down since the turbulent second quarter. The Russian war on Ukraine has created uncertainty for many investors which impacted investment strategies. International investors are returning to their home markets and are still shifting away from offices and retail to put their focus on logistics and residential. This leaves local investors the opportunity to continue to invest in Belgium. As a result of this growing interest, investment volumes for residential properties increased have gradually since 2016-2017 to reach new summit in 2021. Last year, around 335 million Euros were invested in the Belgian residential market (including student accommodation assets). Investment volumes for 2022 stand at 175 million Euros.
In a future article, we will examine the emerging co-living segment and what it means in practice.