Brussels boosted by first forward purchase in 5 years

The Brussels market has received a further vote of confidence as a German fund manager agrees to acquire the Belview office project before completion.

The deal is the first forward purchase commitment in the Belgian capital since the start of the crisis five years ago, according to Cushman & Wakefield which acted for the scheme’s developers Allfin and BPI.

The buyer is a closed-end fund managed by Munich-based iii-investments.

The parties did not disclose the financial details but PropertyEU understands the investment volume was about €26 mln, reflecting a net initial yield of 6.15%.

EUROPEAN DISTRICT
Belview will comprise just over 5,000 m2 of offices, 165 m2 of archive space and 26 parking bays. The property aims to achieve BREEAM ‘Very Good' sustainability certification. Delivery is scheduled for the first quarter of 2014.

Cushman & Wakefield said the location of the project in the Leopold district (also known as the European district) is 'highly strategic'. It will be situated between the headquarters of the European Commission and the European Parliament.

Maxime Xantippe, head of capital markets of Cushman & Wakefield, said: 'With its ideal location and the quality of the building, we can predict that there will be enough candidate-occupiers. The take-up in the Leopold district of 2012 was around the 116.000 m2 mark.'

'The risk of void for new offices in the heart of the district seems to be limited. The European district (Leopold district) remains the most expensive office district in Belgium with rents for the best buildings and locations of €285 per m2,' Xantippe said.

The investment volume is relatively modest compared to other European markets and pales in comparison to big-ticket deals in London; earlier this week AXA Real Estate led the acquisition of the 53,000 m2 standing office scheme, Ropemaker Place, in the City of London for some €540 mln. Size aside though, the Belview deal has been welcomed by market players in Belgium has a further sign confidence is returning after 4-5 years of a property recession since the outbreak of the financial crisis in 2008.

DEAL REVIVAL
The Belview deal comes days after Eurozone Equity sold the mixed-use asset Louise Village in Brussels to local private investors for €55 mln.

In February Commerz Real Spezialfonds sold the 9,000 m2 City Garden in the European District in what is believed to be the largest office transaction in the Belgian capital over the last two years. PropertyEU established from independent sources that the price was around €40 mln, reflecting an initial yield of just over 5%.

Belview differs in two ways: it is one of the limited number of speculative office projects to be greenlighted for Brussels as a lack of bank financing has in recent years has reduced the office development pipeline to a trickle.

Secondly, Cushman & Wakefield's Xantippe noted that this is the first office forward purchase in the city in five years. 'These types of transactions were relatively common before the crisis but then the market dried up.'

Xantippe: 'Due to the restrictive financing policy of the banks there is a marked decrease in prime office developments. Consequently, scarcity and demand refocus investors' attention on these few developments under way in the best locations.'

Click on the links for Belgian news, and the PDF of the Focus on Belgium published in the March edition of PropertyEU Magazine