The Belgian region of Wallonia is making the most of its central location in western Europe when it comes to attracting real estate investors. Prices are lower in the area than in other parts of the country, which makes it attractive, but the region as a whole still faces challenges such as property investment tax reforms and higher-than-average unemployment.
Christophe Nihon, director of real estate broker ImmoQuest, believes that development in the region will be affected by a new territorial development code due to come into effect on June 1, 2017. “This should make it easier for developers and should help attract investors by simplifying and speeding up procedures associated with developing and investing in a project. In turn, it should result in more property entering the market,” he says.
Pierre-Paul Verelst, head of research for Belgium and Luxembourg at property dealer JLL, says that as in the rest of Belgium, the residential market in Wallonia is largely made up of owner-occupied homes (about two-thirds of the housing stock) with very limited institutional ownership and some state ownership of social housing.
“Walloons and all Belgian citizens generally stay in the same home for long periods and move less compared with neighbouring countries, partly because of high registration duties in the purchase of housing and real estate in general,” he says.
Tax deductability for mortgages on an individual’s personal residence (the bonus logement) have been a regional matter since 2015. “Wallonia could change the deductability as Flanders and Brussels did recently,” says Mr Verelst. “At this stage, it remains unchanged. Should the regional government change its mind for budgetary reasons, there could be an impact on prices, but it’s a politically sensitive topic for a centre-left government. The economic climate is not supportive and unemployment in Wallonia is way above the country average at 13.8% in June 2016.”
Filip Derijck, managing director of the Brussels office of real estate consultancy Knight Frank, adds: “Despite unfavourable tax reforms for residential investors in Wallonia [stamp duty has recently increased by 2.5% for certain property buyers], the Walloon residential market has performed well, although from a low base. This is mainly due to a positive evolution of the economy combined with job creation.”
Residential property is cheaper in Wallonia than in other regions of Belgium. According to Mr Derijck, the average house (excluding villas) costs €178,500 (up 3.8% on 2015) in Wallonia while the average apartment costs €163,250 (up 5.9% on 2015).
“These are the highest increases across Belgium’s three regions,” he says. “To put things in perspective, however, the average for a house in Belgium as a whole is €238,200 and the average for an apartment is €214,750.”
Mr Verelst says availability of land is critical to sustaining Wallonia’s residential property market, and supply varies from province to province. “It is constrained by soil legislation, which could be problematic in old industrial areas,” he adds.
According to Mr Derijck, Wallonia’s office market has been historically well managed and has not suffered the oversupply problems that have hit Brussels and Flanders.
“We’ve seen a number of huge investments in Wallonia’s commercial property market in recent years and 2016 was one of the biggest years for retail investment since 2008,” adds Mr Nihon. “For example, Ikea opened a 34,500-square-metre store in Mons in 2016; Primark opened a new store in Mons and extended its store in Liege in 2016. It also opened a 5800-square-metre store in Charleroi in 2016. Zara opened a 3300-square-metre store in Liege and C&A [opened] a new shop in Charleroi in the final semester of 2016.”
According to Didier Delobel, head of the industrial department in Brussels for Knight Frank, most industrial and logistics activity in Wallonia is concentrated in the Brussels-Mons-Charleroi triangle, in the provinces of Walloon Brabant and Hainaut, and around Liege.
“Hainaut suffers from the highest unemployment rate in Belgium,” he says. “Very little is left of its once-glorious coal mining and steel industry. Industrial and logistics real estate developers have an increasing interest in the area in the south of Brussels due to a lack of available and affordable industrial land in the north of the country and around the capital. Land prices are between €25 and €45 per square metre depending on location, amenities and size, compared with about €150 per square metre around the Brussels ring road and €100 per square metre in the Antwerp area.”
Projects of interest
Opportunities for investors in Wallonia’s property market include residential, logistics, retail and office developments on both green and brownfield sites.
For example, Namur’s Confluence project aims to create a smart city with a digital port by 2020. Another tech-focused scheme is TechniCite, in the city of Tournai, which is being designed for use by local people and businesses. Scheduled to open in 2019, it is being delivered as part of the Walloon Marshall Plan 2 Green.
A number of other projects have a strong emphasis on sustainability. They include the new 12,600-square-metre Soleo technology centre, which entered its final phase of construction in October 2015. The Geothermia project is offering zero-carbon dioxide emissions heating to businesses in Mons. There are a number of investment opportunities at the new multifunctional eco-neighbourhood project at Les Terrasses du Luxembourg, Arlon. This includes apartments, serviced residential buildings, small retail outlets and offices.
Investors, co-investors and property managers are being sought to develop land at Airport City in Liege. This offers investors the opportunity to get involved in projects linked to offices, hotels, business park services and retail stores. Also in Liege is a dedicated air cargo and logistics park, Flexport City, which opened in 2016.
Phase one of the ABLI Quevaucamps retail park opened in 2015. This 26,500-square-metre shopping mall is made up of 21 units and includes parking for 950 vehicles.
Ferme du Château des Italiens Tubize, between Brussels and Nivelles, is a 1500-square-metre site for sale with plenty of development potential, including housing, offices, SME warehouses and day nurseries.
Over in the city of Seraing, the authorities are currently carrying out feasibility studies and seeking investors in the Trasenster Student Housing programme. Plans include the renovation of high architectural value buildings and the construction of buildings for student housing among other applications.
Costs of this report were underwritten by the Wallonia Export & Investment Agency. Writing and editing were carried out independently by fDi.