Interest in real estate as an asset category will likely increase in the wake of the current stock market crash, according to Gaetan Clermont, CEO and managing director of CB Richard Ellis' Belgian operation. 'Allocations to real estate will improve,' he said at the Investors Forum 2008 held Thursday in Brussels by Expertise Immo Media.

Interest in real estate as an asset category will likely increase in the wake of the current stock market crash, according to Gaetan Clermont, CEO and managing director of CB Richard Ellis' Belgian operation. 'Allocations to real estate will improve,' he said at the Investors Forum 2008 held Thursday in Brussels by Expertise Immo Media.

Clermont said the European real estate market had witnessed a transformation in recent months from debt to equity-driven transactions following the fallout of the subprime mortgage crisis in the US. Loan-to-value ratios have meanwhile come down from levels of 85% and higher to 70%, he added. 'We are now seeing more traditional lending processes. Equity players are still there, and more so than in the past.'

He pointed out that German open-ended funds have been largely absent from the market in the past two years, but that they are now poised to come back as strong buyers. 'In 2007 they saw a huge inflow of new equity totalling some EUR 10 bn. Assuming a loan-to-value rate of 50%, this implies EUR 100 bn in investment capacity.'

Belgium booked a record EUR 5 bn in investment deals in 2007, with foreign investors accounting for more than half of that figure (57% ). For the current year, Clermont views retail as one of the best asset classes in the Belgian market. 'We expect the highest rental growth in this segment.' Office take-up is also set to improve, he predicted, on the back of public-sector demand. 'Private sector demand will be slightly lower due to the economic conditions.'

Erik Koeklenberg, head of Fortis Real Estate Finance Europe, sees yields in Belgium softening by 75 basis points in 2008, but the effects of the subprime crisis will likely be limited, said Serge Fautré, CEO of Belgium's largest listed company Cofinimmo. 'The subprime crisis has already affected us, we probably won't see much more effect.'