Europe's capital re-emerges from doldrums

Investors are keen to get back into a market where occupier demand is rising and vacancy rates are falling but lack of the right product has limited deal activity

President Barack Obama’s call for a free trade pact between the US and Europe is likely to require a lot of tough negotiations.

But for the prime end of Brussels’ real estate market - the biggest in Belgium - the opening of trade negotiations is very welcome indeed. The talks help cement a steady recovery of the city’s occupational real estate market after three to four years of a ‘property recession’. During the period from the 2008 global financial meltdown, the European project - headquartered in Brussels - lost momentum and the very existence of its currency, the euro, has been called into question. But the European Union didn’t unravel as some commentators predicted. While it is not out of the woods yet by any means, it is still standing and the free trade talks have put it back centre stage. According to Gregory Martin, head of Savills Belgium, the USEuropean trade talks should mean that a lot of American companies will want to be located in the central business district of Brussels. ‘Let’s face it - that’s where the decisions are made,’ Martin says. The same applies to corporates headquartered in other regions of the world and the legion of lawyers and lobbyists representing the entire spectrum of parties with an interest in decision-making within the European Union. David Bouch of EuroCapital Property Investors cites the example of Samsung. The South Korean conglomerate - best known
for its range of smart phones - recently rented a few hundred square metres for a European representative office in one of EuroCapital’s properties. Four months later they came back and doubled the amount. Bouch: ‘That is the nub of the whole thing. There was a period about four or five years ago when people thought the intensity of EU activity was going to fizzle out. Now for good or bad, people feel they should be in Brussels because they have come to accept there will be more management from the centre. They need to be here to understand what is happening and maybe influence it, and that need has never been greater.’ Brussels is already seeing more demand for space. Take-up reached 348,000 m² last year, according to the latest report from Savills. This was below the 10-year average but 5% above the 2011 level. Corporates were responsible for 74% of the take-up.

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