Steady As She Goes In Brussels
The Sunday Business Post IE, Sunday 30th November 2008Looking for a solid, dependable investment location? Head for the Belgian capital, writes Richard Holledge.
The one thing no one needs in the property market right now is excitement.
No dramatic rises, no horrifying slumps. Just a nice steady investment in a nice steady place.
It’s called Brussels.
The Belgian capital is a solid, practical city with street after street of redbrick houses that have been built to last. It comes as no surprise that a recent survey showed that most Belgian families stay in the same house for 35 years. No hysterical property ladder clambering in this city.
In fact there’s no hysteria of any kind. The traffic runs smoothly, the trams glide.
Even the protest marches by discontented Latvians or peeved Poles are well-behaved, and the threatened traffic jams efficiently dispersed by the police.
The only discordant note is caused by the buildings for the European Union, which has its headquarters here – the hideous wedge of glass of the Berlaymont , aka the Berlaymonster, used by the European Commission, and the domed parliament building, which looks like a giant greenhouse.
But these buildings also represent most of what Brussels is about and why the city is worth a look, both as an investment and as somewhere to live. The EU civil service employs at least 24,500 people. There are 785 MEPs and there is a strong movement to stop the crazy monthly flit to Strasbourg for its alternative parliamentary sitting and make Brussels the full-time EU capital.
The city is also the headquarters of Nato so there are plenty of people – maybe as many as 60,000 ex-pats – along with the one million Belgians who live there who need a place to live.
So where do the bureaucrats hang their hats? Wherever they choose, because the road system is fast. Tunnels from the centre to the airport mean the MEP in a hurry can get across Brussels in 15 minutes and on the plane for the one-hour-thirty-minute flight to Dublin.
Paris is less than two hours away by train; a new high-speed line due to open soon will bring Amsterdam to within 1 hour and 45 minutes; Aachen, Dusseldorf and Cologne are all within 1 hour 30 minutes; and London is 1 hour 55 minutes away.
Along with its rows of three-storey terraced houses known as maisons de maitre, many of which have survived in the art nouveau style of the late 19th century architect Victor Horta, Brussels is a city of parks and green spaces.
One of the most popular is Woluwe Park to the east, where Irish developer Thornsett Group is preparing the foundations for a development, named after the park, of 16 familysized flats and duplexes with prices from €335,000.
‘‘One of the appealing things about Brussels is that there are 19 communes in the capital and they all have a sense of identity,” said Eoghan Quinn, Thornsett’s commercial manager.
‘‘Every week there is a food or clothes market, and there are lots of delis and bakers, which helps to make everything very social and relaxed. Surprisingly, there are very few supermarkets in the capital, which helps create this warmer, more friendly atmosphere.”
Areas to check out include Uccle to the south, the streets off the rather formal Rue Turverun, and Ixelles, which includes one of Brussels’ biggest parks and some of the wealthiest homes, as well as the Matonge district, which is known as the ‘‘little Congo’’.
A four-bedroom maison de maitre can be found in Ixelles with estate agent Century 21 for €495,000 or a 350 square metre four-bed, four-bath flat for €1.35million. A classic newly-renovated four-bedroom townhouse in a quiet street near the walled Tenbosch Park is on sale with Immo Abylon for €825,000.
The area around the parliament and the Berlaymont which has become known as the European Quarter – has become highly-sought after, with almost 1,000 new homes scheduled on 11 sites by the end of next year. It is here that the prices rose fastest in the five years before the international economic crisis kicked in.
Quinn, who started work in a Brussels bar 18 years ago, said: ‘‘It used to be dead, dead, dead in this district, now it is full of life with cafes and bars. It’s a change for the better.”
Thornsett Group is developing Leopold Village, a mix of 108 apartments, 1,500 square metres of retail space and a 150-room hotel. Prices start at €140,000 plus taxes for a 39 square metre studio and rise to more than €1million for a four-bed penthouse.
‘‘I expect 40 per cent of our sales will go to investors and the balance to owner occupiers,” said Quinn. ‘‘The properties will appeal to commuters who might work for the EU and come here for three or four days a week, while the development at Woluwe is aimed more at the owner-occupier.”
Much is made of the hotel. Called aloft (the lower case ‘a’ is all part of the image) it has been designed by the Starwood chain to encourage guests out of their rooms to mix and mingle in the lobby bar or to relax in the fitness centre. The decor is all stripes and low sofas, which looks exhausting but will no doubt be a hit with the younger EU workers.
‘‘Belgium is getting trendier, which will help attract younger buyers, but it remains safe and dependable,” Quinn said. ‘‘According to a recent survey, Belgium was the only country out of 42 European countries to have resisted the boom and bust.”
One thing is inescapable: Belgium is a highly regulated, highly taxed country. Maybe, perversely, that adds to the sense of security. For example, if a builder goes bust, the bank takes over and finishes the job, ensuring that the buyer does not lose the property.
‘‘For a landlord in Brussels, the legislation is very much in their favour,” said Quinn. ‘‘There is no tax payable on private residential rental income. Property owners pay no capital gains tax on residential property if held for more than five years, and there is no CGT to pay on shareholder transactions. For new-build property, yields are at approximately 5 to 6 per cent.”
The tenant is entitled to a three-year lease; the owners pay the rates and the tenants pay all other bills. Rent is inflationlinked and goes up automatically. Unlike Dublin, in Brussels there is a three-month bank guarantee and the tenant has to give a months’ notice for every year left on the lease.
However taxes are quite high. The buyer has to pay stamp duty and 21 per cent Vat, so on a new property worth €200,000 the buyer pays €6,250 stamp duty and €31,500 Vat. So it seems that lack of excitement comes at a price.