Belgian property returns weaken

Belgian investment property delivered a total return of 3.6% last year – down on the 4.6% achieved the previous year, reports Property EU. With inflation at 2.1%, the result shows that the property investment market is not immune to the macro-economic environment in Belgium, according to the IPD Belgium Annual Property Index. The index showed a weaker performance over 2012 against other major asset classes, with equities delivering the highest return at 38.6%, followed by property equities at 12.6% and bonds at 20.9% (JP Morgan 7-10 years). However, over a five-year period, direct property still outperformed equities and property equities. As in the last two years, income return for all sectors was stable at 5.8%, implying that the capital growth of -2.1% in 2012 was the cause of the declining total return. Over the last five years, the cumulative capital growth was -8.1%. The retail sector showed the highest total return of 5.8%, while industrial delivered the lowest total return of 2%. Offices showed a total return of 2.8%. Both offices and industrial showed a capital growth, with -2.9% for offices and -4.9% for industrial. Arnoud Vlak, managing director of IPD Benelux, said: “Depreciation of investment property did not end during 2012. The retail sector, however, showed positive but gradually decreasing capital growth over the last three years. Over the same period, offices showed depreciation of capital values. The vacancy rates in the office market, one of the important indicators for capital growth, grew significantly in that same timeframe due to the present economic downturn. Nonetheless in all sectors direct property proves to be a generator of an overall stable income return, thus showing direct property to be a resilient long-term investment.”