Mild correction in Belgian property market in 2008, says IPD

Belgian commercial real estate delivered mild capital depreciation over 2008, at -1.2%, according to the IPD Belgium Annual Property Index. Income returns over last year were robust, falling just 10 basis points to 5.7%, contributing to an annual total return of 4.5%.

The all property capital growth average for 2008 would have been weaker was it not for the resilient retail sector, at 4.4%, supported by strong capital growth at shopping centres segment level, at 5.2%. By contrast, industrial and office sectors delivered capital growth of -3.6% and -3.0%, respectively.

Each of the five office segments delivered negative capital growth, while all property initial yields moved out by 10 basis points, ending the year at 6.3%.

Annualised total returns over three and four years, the full length of the index, was 7.6% and 7.3%, respectively. By comparison with other asset classes, Belgian real estate outperformed equities and property equities, which returned -51.7% and -15.4%, respectively, while performing in line with bond markets, at 4.5%, according o the JPM GBI 7-10 Years Index.

Enguerrand De Fontaines, Belgium Country Manager at IPD said: 'For the first ime in the index's four-year history, there is negative capital growth in all principal segment levels except retail, while shopping centres growth is considerably down on 2007’s 10.3% capital growth.'