16. Juli 2012 
Print
Print
Brussels - The first quarter’s beginning to look like last year
During the first quarter of 2012, a total of 99,900 m² of office space was leased in Brussels, considerably more space than the previous year’s figure and 10% above the first quarter average over the last five years. The market dynamics remained unchanged, and the demand for office space continued to be led by occupiers' intention to find ways of reducing real estate costs and increasing efficiency through optimising the usage of their space.
Office space market availability in Brussels continued its downward movement during this first quarter, but at a slower pace, with the vacancy rate ranging from 11.2% to 11.0%. The vacancy rate reached its lowest level since the second quarter of 2009. The return of speculative development in the short term and midterm remains highly restricted due to weak leasing activity. Developers continue to focus on the reconversion aspects of this new favourable market.
While prime rental levels remained stable at 265 euro/m², the average rent, supported by a demand favouring quality space, was 165 euro/ m². Despite the few speculative schemes combined with a decrease in availability, any rental growth over the coming months is expected to appear without any strong improvement on the demand side. The slowdown observed in the Brussels office investment market during the past year was confirmed during the start of this year. Q1 2012 saw a significant slump in activity as compared with the previous quarters, and the investment volume this quarters amounted to only €46 million. The market spotlight was mainly focused on retail investment.
Macroeconomics
The second half of 2011 was a difficult period for the Belgian economy, on the back of heightened uncertainty in the global economy. An unstable government and a high debt to GDP ratio served to magnify the impact on the economy. However, in the context of European, the economy fared much better than many countries. Quarterly GDP contracted in Q3 (-0.1%) and Q4 (-0.1%) of 2011, although overall in 2011 the economy recorded an annual GDP growth of 1.9%; due to a strong growth in the first half of the year. This made Belgium one of the best performing economies in the Euro zone in 2011.
As we await official data for Q1 2012, the latest sentiment indicators point to a stabile Q1 2012. However, this stability has come at a time when the wider European economy is characterised by continuing economic uncertainty that is now spreading to the core countries as well. As we move into the remaining quarters of the year, it is not clear that this stability will hold, as some of the challenges that the economy faced, both at home and abroad, in the later part of 2011, resurfaces. The export market is likely to remain weak on the back of a slowing European economy; confidence among consumers and businesses remains weak in Europe in general despite improved sentiments in the financial markets and this will provide headwinds for external demand. Domestically an accelerated fiscal consolidation programme is beginning to weigh on both government spending and the labour market, and therefore domestic demand in general.
Although labour market conditions have remained stable, the unemployment rate rose slightly (+0.1%) in January to stand at 7.4%. The drive to increase competitiveness in many Euro zone countries implies that the outlook for labour market remains subdued, and in Belgium much of the focus of labour reforms, thus far, has been on liberalising wage bargaining and indexation, rather than employment protection. Therefore firms are likely to remain cautious in adding to head count without clear improvement in demand; serving to restrict improvement in employment level.
On the back of these developments we expect marginal contraction in economic activity in H1 2012. It is hoped that the second half of the year will see improvements in activity as the government’s fiscal consolidation plans, in particular, and that in Europe, in general, firms up. Nonetheless we expect that this will be insufficient to prevent the economy from experiencing weak growth (+0.2%) in 2012 and a moderate growth (+1.2%) in 2013. Beyond these years growth can accelerate at a rapid pace, predicating on an internal economic fundamentals that is better than that in many European countries; labour market remains strong, with unemployment rate that is well below the Euro zone average; high level of retail deposits implies that the banking sector relies less on wholesale market funding and therefore less susceptible to potential credit crunch.
Office space market availability in Brussels continued its downward movement during this first quarter, but at a slower pace, with the vacancy rate ranging from 11.2% to 11.0%. The vacancy rate reached its lowest level since the second quarter of 2009. The return of speculative development in the short term and midterm remains highly restricted due to weak leasing activity. Developers continue to focus on the reconversion aspects of this new favourable market.
While prime rental levels remained stable at 265 euro/m², the average rent, supported by a demand favouring quality space, was 165 euro/ m². Despite the few speculative schemes combined with a decrease in availability, any rental growth over the coming months is expected to appear without any strong improvement on the demand side. The slowdown observed in the Brussels office investment market during the past year was confirmed during the start of this year. Q1 2012 saw a significant slump in activity as compared with the previous quarters, and the investment volume this quarters amounted to only €46 million. The market spotlight was mainly focused on retail investment.
Macroeconomics
The second half of 2011 was a difficult period for the Belgian economy, on the back of heightened uncertainty in the global economy. An unstable government and a high debt to GDP ratio served to magnify the impact on the economy. However, in the context of European, the economy fared much better than many countries. Quarterly GDP contracted in Q3 (-0.1%) and Q4 (-0.1%) of 2011, although overall in 2011 the economy recorded an annual GDP growth of 1.9%; due to a strong growth in the first half of the year. This made Belgium one of the best performing economies in the Euro zone in 2011.
As we await official data for Q1 2012, the latest sentiment indicators point to a stabile Q1 2012. However, this stability has come at a time when the wider European economy is characterised by continuing economic uncertainty that is now spreading to the core countries as well. As we move into the remaining quarters of the year, it is not clear that this stability will hold, as some of the challenges that the economy faced, both at home and abroad, in the later part of 2011, resurfaces. The export market is likely to remain weak on the back of a slowing European economy; confidence among consumers and businesses remains weak in Europe in general despite improved sentiments in the financial markets and this will provide headwinds for external demand. Domestically an accelerated fiscal consolidation programme is beginning to weigh on both government spending and the labour market, and therefore domestic demand in general.
Although labour market conditions have remained stable, the unemployment rate rose slightly (+0.1%) in January to stand at 7.4%. The drive to increase competitiveness in many Euro zone countries implies that the outlook for labour market remains subdued, and in Belgium much of the focus of labour reforms, thus far, has been on liberalising wage bargaining and indexation, rather than employment protection. Therefore firms are likely to remain cautious in adding to head count without clear improvement in demand; serving to restrict improvement in employment level.
On the back of these developments we expect marginal contraction in economic activity in H1 2012. It is hoped that the second half of the year will see improvements in activity as the government’s fiscal consolidation plans, in particular, and that in Europe, in general, firms up. Nonetheless we expect that this will be insufficient to prevent the economy from experiencing weak growth (+0.2%) in 2012 and a moderate growth (+1.2%) in 2013. Beyond these years growth can accelerate at a rapid pace, predicating on an internal economic fundamentals that is better than that in many European countries; labour market remains strong, with unemployment rate that is well below the Euro zone average; high level of retail deposits implies that the banking sector relies less on wholesale market funding and therefore less susceptible to potential credit crunch.
Quelle: BNPPRE Germany
