31 mei 2022
19:39
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Four Belgian funds want to invest almost 900 million euros in the purchase and rental of large blocks of rental apartments. The sudden interest in ‘block sales’ is partly the result of the corona crisis.
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In the shadow of the Brussels skyscraper Up-Site, a remarkable transaction took place this week. The Kuwaiti developer KBT sold Kanal Brussels Terrace, a recently completed new construction project with 34 apartments, for an undisclosed amount to ION Residential Platform (IRP). This consortium, consisting of the Waregem project developer ION, the Dutch pension fund Bouwinvest and the investment arm of the broker CBRE, wants to rent out all the flats in the building itself.
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Until recently, Home Invest Belgium was the only major player that focused on the large-scale acquisition and rental of apartments in Belgium. In recent years, the listed company has built up a portfolio of 660 million euros in rental units in Belgium and the Netherlands. In 2019, Patrizia was the first major foreign investor to land in Belgium. The German fund then took over GreenLife, a housing complex of the developer Matexi in Uccle.
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Last year, no fewer than four Belgian players announced their entry into the residential rental market. Together, the funds have almost 900 million euros at their disposal to invest in the purchase and subsequently the rental of apartments under their own management, according to figures collected by De Tijd (see chart).
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The essence
- More and more large real estate funds are landing on the residential rental market in Belgium.
- Four new players have 900 million euros ready to buy and rent apartment buildings.
- The funds respond to the growing demand for affordable rental housing.
- Developers can reduce their risks through ‘block sales’.
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When an apartment becomes available, five people immediately queue up, often friends or family of tenants in the building.
Julie De Bruyn
Investment manager Buysse & Partners
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The sudden interest in the sale of flats in block is partly the result of the corona crisis. Investors were lured by ‘beds & sheds’ (logistics real estate and housing), the segments that weathered the pandemic best. “Residential real estate is seen as a defensive real estate segment,” said Sam Bordon, investment director at ION. ‘During the corona crisis, residential real estate performed better than shops or offices.’
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At the same time, renting is on the rise. According to Eurostat figures from 2020, 71 percent of Belgians owned their home. But rising mortgage rates, growing living costs and exploding prices for building materials are driving more demand for rental properties. ‘When an apartment becomes available, five people immediately queue up, often friends or family of tenants in the building,’ says Julie De Bruyn of Buysse & Partners. ‘There is an enormous shortage of quality, affordable housing in Brussels and Antwerp.’
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Due to the higher share of tenants, Brussels is the favorite market of large investors. In the capital, only 39 percent of the inhabitants own their own home, according to figures from Statbel. Cheaper municipalities, such as Anderlecht and Schaerbeek, or Deurne and Hoboken in Antwerp are most in demand. Lower land prices allow investors to lower rents, reaching a wider audience.
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For a long time, developers were hesitant to sell their new construction projects to one company. Selling per item to private individuals usually yields more. But a block sale also offers developers advantages. They earn their money back faster, lose less time selling and are sure to lose all the homes. Ideally, the developer already opts for a ‘build to rent’ (BTR) approach at the start of a project. Clean rental complexes require more specific amenities, such as a parcel wall, communal laundry room or garden. As soon as the developer sells one apartment separately, a block sale is off the table.
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The biggest stumbling block to the growth of block sales is the insufficient availability of condominiums.
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The new players are each looking for their own niche. Foreign funds are targeting large residential complexes. For example, in February Patrizia bought a block with 115 rental apartments under construction in Schaerbeek for 59 million euros, the largest Belgian block sale ever. The ION fund IRP prefers new construction projects that are ready within two to three years. Buysse & Partners approaches families who own existing, largely rented apartment blocks. Quares also looks at smaller projects in central cities outside Brussels and Antwerp. For example, the company bought its first block with 13 units in Mechelen.
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The biggest stumbling block to the growth of block sales is the insufficient availability of condominiums. ‘In Belgium it is a matter of supply’, confirms Suzy Denys, the person in charge at Patrizia. ‘There is almost nothing on the market. An institutional market will emerge, but that will take time. The Belgian simply has a brick in the stomach historically.’
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