Explore the promising rebound of Belgium’s real estate market in 2025. Discover key factors influencing investment decisions today.

The Belgian Real Estate Market: A Promising Rebound in 2025

The Belgian real estate market is on the brink of a significant rebound, with projections indicating a robust recovery beginning in 2025. This anticipated resurgence is fueled by a combination of declining interest rates, wage indexation, increasing housing shortages, and pivotal legislative changes. Analysts forecast a notable increase in housing prices, with a projected rise in 2025 followed by sustained growth into 2026.

Factors Influencing the Market

In recent years, the European Central Bank (ECB) implemented aggressive interest rate hikes, leading to a sharp rise in long-term mortgage rates. This trend has constrained buyers’ borrowing capacities, making home ownership a distant dream for many. However, a transformative shift occurred in June 2024 when the ECB began reducing deposit rates, resulting in a corresponding decline in mortgage rates. While short-term rates are expected to continue their downward trend, a stabilization of long-term interest rates is anticipated in 2025, potentially accompanied by a slight increase throughout the year.

The reduction in mortgage rates has significantly improved housing affordability, allowing potential buyers to secure larger loans for the same monthly payments. This newfound affordability has spurred a marked increase in market transactions, setting the stage for heightened activity in 2025, which is likely to further drive price growth.

Legislative Changes Impacting the Market

Legislative changes are poised to influence market dynamics significantly. Starting in 2025, Flanders will reduce registration fees for primary residences from 3% to 2%, while Wallonia will see a dramatic decrease from 12.5% to 3%. These adjustments are expected to elevate property prices and benefit sellers, although the removal of certain incentives in both regions may temper the price increases associated with the registration fee reductions.

Interestingly, the market has experienced a pronounced disparity in price growth between energy-efficient homes and those with higher energy consumption. Energy-efficient properties have appreciated at a faster rate, a trend that is expected to continue. However, the relaxation of renovation obligations may lead to stronger price increases for energy-consuming homes, although this effect will be moderated by the removal of reduced registration fees and additional incentives for properties with lower energy ratings. Consequently, the price growth differential between energy-efficient and energy-consuming homes is likely to persist.

In summary, following a modest price increase of 0.5% in 2024, Belgium’s residential real estate prices are projected to rise by 3% in 2025 and 3.8% in 2026, driven by stable mortgage rates, wage indexation, fee reductions, housing shortages, and legislative changes.

The Belgium Rental Real Estate Market

The demand for sustainable office buildings is surging among major occupiers, significantly enhancing the value of Grade A properties. In the office sector, tenants are increasingly prioritizing exclusive services, cost efficiency, and certifiable Environmental, Social, and Governance (ESG) criteria over traditional central business district (CBD) locations, indicating a notable shift in preferences.

In Brussels, prime rents have reached unprecedented heights, with the Leopold District commanding €400 per square meter per year, the Louise District €356 per square meter per year, and the Periphery €200 per square meter per year. Flanders has also witnessed remarkable growth in rental pricing for sustainable properties, with Antwerp at €195 per square meter per year, Ghent at €185 per square meter per year, Leuven at €195 per square meter per year, and Hasselt at €175 per square meter per year. Similarly, Wallonia has experienced rent increases in Walloon Brabant (€200 per square meter per year) and Namur (€185 per square meter per year). This upward trend is expected to persist, fueled by rising construction and labor costs, alongside sustained demand for high-quality, ESG-compliant buildings.

In 2024, the industrial and logistics (I&L) market in Brussels and Wallonia exhibited stable prime rents. The interplay of land scarcity, consistent demand for sustainable and high-performing built-to-suit warehouses, and elevated construction costs suggests potential rent increases on the horizon.

High street retail rents, which plummeted during the pandemic, began to recover in 2022, achieving levels of €1,650 per square meter per year in 2023. In 2024, rents on Rue Neuve in Brussels remained steady, while rents on Antwerp’s Meir escalated to €1,700 per square meter per year. However, further increases in retail prime rents appear unlikely during the first half of 2025.

Belgium Investment Property Yield

Estimating prime yields in the current market remains a formidable challenge due to the scarcity of Core transactions. Market participants continue to rely on sentiment-based evaluations, taking into account factors such as interest rates, bond maturities, and overarching market conditions. The yield estimate for 2024 remains unchanged. Despite optimistic economic forecasts and the ECB’s two 25 basis point rate cuts, with additional reductions anticipated in the coming year, the yield spread over policy rates remains too narrow. Consequently, a decline in yields is not expected before the second quarter of 2025. Currently, prime yields are approximately 5.0% for office and I&L properties, and 4.8% for retail. With anticipated pauses in rate hikes, yields are likely to stabilize in the near term.

The Belgian real estate market presents a compelling opportunity for investors, particularly as the landscape shifts in response to economic and legislative changes. With a projected rebound in housing prices and a growing demand for sustainable properties, now may be the ideal time to consider investments in this dynamic market. As the market evolves, staying informed about trends and developments will be crucial for making strategic investment decisions.