Belgium Luxury Residential Real Estate Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)
Belgium Luxury Residential Real Estate Market is expected to register a CAGR of more than 4% during the forecast period (2022-2027).
The COVID-19 pandemic severely affected the luxury homes market, as the market experienced decline in sales transactions. Due to the pandemic restrictions and lockdown measures which affected sales in the country. In addition, Flanders witnessed decline in sales 24.6% in the first three quarters in 2020, followed by Wallonia (-11.0%) and Brussels (-14.3%).
According to Belgian Federal Government, the annual inflation rate for house prices amounts to 8.2 % in the third quarter of 2021 compared to 7.4 % in the previous quarter. Also, the house price index can be broken down by new houses and existing houses. In the third quarter of 2021, annual inflation amounted to 8.7 % for new houses and 8.2 % for existing houses. The weights of these two types of houses (new houses and existing houses) in the overall index amount to 28.4 % and 71.6 % respectively for the year 2021.
Furthermore, the demand for luxury homes is driven by people’s growing preference towards luxury amenities, and wealthy buyers who are looking for reliable places for real estate investments. Moreover, the number of permits issued for new residential buildings in 2021 has increased by 11.2% to 31,804 buildings compared to 2020. This increase can be observed in each of the 3 regions, as building permits amounted to 8.6% in the Flemish Region, to 19.4% in the Walloon Region and to 21% in the Brussels-Capital Region.
Belgium Luxury Residential Real Estate Market TrendsBelgium is Experiencing Growth in Dwelling UnitsBelgium is witnessing significant growth in luxury real estate market, which is driven by changing lifestyle of young generation of business leaders, entrepreneurs or wealthy professional men and women, who are keen on travel, new experiences, leisure, and flexibility, which leads them to prefer cities such as Brussels, Antwerp, Ghent or their nearby green suburbs. Further supporting the highest number of luxury homes sales in Belgium, majorly in top 4 municipalities (Antwerp, Schilde, Sint-Martens-Latem, Uccle).
According to the house price index published by Statbel, house prices across Belgium as a whole rose by 8.2% in Q3 2021 compared to 7.4% in the previous quarter. The average price inflation rate for the last four quarters (Q3 2021-Q3 2020) amounts to 7.1%. The house price index stands at 129.46 points against 125.71 points in the previous quarter, it has increased by 3.0% compared to the second quarter of 2021.
Furthermore, in 2021, more than 5.63 million new dwelling units were built, with 1% growth rate from 2020 (5.57 million units). In addition, different categories in dwelling units are closed homes (with 1,338,418 units), half-closed homes (with 1,006,310 units), open type homes with farms (with 1,438,396 units), apartments (with 1,544,045 units), houses of commerce (with 160,569 units), and other buildings (with 143,899 units).
Flemish Region is Witnessing Significant GrowthFlemish region is experiencing significant growth in luxury housing market, due to urbanization. Flemish region is characterized by extensive urban sprawl, more than 33% of its territory is now “settlement area”, which is used for housing, industrial and commercial purposes, health care, education, nursing infrastructure, roads and rail networks, recreation, etc. Furthermore, in December 2021, the Flemish Parliament approved a series of changes to reduce the registration duties on the sale of residences, which supported the building sales in this region.
In addition, in January 2022, the rates are further reduced on the purchase of an owned and only residence, the rate drops to 3% (instead of 6%). In the case of a major energy renovation or demolition and rebuilding of the house, the rate will be 1% (previously 5%). However, the maximum purchase price for a modest house increases from EUR 200,000 to EUR 220,000. In some cities, the limit rises from EUR 220,000 to EUR 240,000.
In 2020, more than 75,600 building units were sold in Flemish region, which is slightly declined from previous year due to the pandemic crisis. Now the sector is experiencing rapid growth, which is supported by urbanization, and reduced taxes. In 2021, more than 1.4 million housing units were built with built-up area on the ground exceeding 104 square meters, in which open type of houses along with farms contributed largest share with 59% of the total housing units.
Belgium Luxury Residential Real Estate Market Competitive AnalysisBelgium Luxury Residential Real Estate Market is fragmented with many players. Key players in the market are leveraging partnerships, acquisitions, and mergers to capture the market share. Some of the major players in the market include Be Luxe, BellesDemeures, BARNES, Sotheby's International Realty Affiliates LLC, and Mexx.
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