Risk of overheating in investment real estate?

November 14, 2020

12:50

According to Nicolas Jacquet, founder of OWN, in investment real estate, “everyone wants the same thing, at the same price. We therefore sometimes see very aggressive transactions”. Here is the report of the real estate debate that took place this Saturday at Finance Avenue.

This Saturday, for the digital edition of Finance Avenue, we had an appointment with Bruno Colmant, CEO of Degroof Petercam, Nicolas Jacquet, founder of OWN and Tim Leysen, expert at Stadim, to discuss the impact of the crisis health in the real estate market.

What are the supporting factors and the new risks that have appeared with the health crisis for the investment property market?

More and more tenants

According to Nicolas Jacquet, founder of the real estate investment consulting firm OWN, “the current crisis strengthens the presence of investors seeking stability. They continue to boost the market. Rates are still very low and investors, like savers, have more and more cash “. These findings are also accompanied by a new situation on the real estate market: “Young people are less and less inclined to own property at all costs. They want to keep maximum flexibility. This is very good for investors, because their assets must be liquid and appeal to the greatest number “.

What confirms Tim Leysen, advisor at Stadim. “In general, we are moving towards a Belgium with more tenants. The banks are asking for more and more own resources to grant a loan. This will lead to a more limited access to property for first-time buyers, who will remain tenants. For owners, this demand for more equity does not change much, because if part of an asset has already been repaid, it is usually possible to borrow. “

New housing trends

If there will therefore probably be more and more tenants, will they be looking for the same thing tomorrow as today, following two lockdowns and the rise of teleworking? According to Tim Leysen, “People who want to become owner-occupiers will probably want to buy more houses with gardens. But for example, for those who work in Brussels and live in Wallonia, connection to the main axes was essential. But now, with teleworking, they may be ready to buy less well-connected, but cheaper, housing “.

For the rental market, Tim Leysen warns: “small apartments were very popular in recent years. The developers have built a lot in this direction, but there is a risk of overheating in a few years, when all projects in the pipeline hit the market and with the effects of containment. “Won’t people want to reconsider their housing needs? Will they still want a small apartment while working two to three days a week at home? Won’t they want an extra room, as well as a outdoor space? There will certainly be an impact of the covid on small apartments“.

Nicolas Jacquet (OWN), for his part, believes that with regard to residential investment property, the trend currently observed will not be sustainable. “We will return to the habits that are ours when the deconfinement is total.” According to him, the underlying trends concern other segments: offices, health, retail, logistics.

According to Tim Leysen, another impact would be expected from the side des kots. “Professional investors in student housing will build buildings with larger, more ventilated common areas, terraces, etc. This will have an impact on the non-professional investor who is traditionally located on older buildings, so there is some competition. ”

Risk of overheating

The founder of OWN notes that the main risk for investment real estate is overheating. “The risk lies within investors themselves. Their demand is only increasing, but supply does not follow. New residential or existing residential, everyone wants the same thing, at the same price. very aggressive price transactions. “

Wallet

Has investment in real estate remained “THE” safe haven in this context? Bruno Colmant, CEO of Degroof Petercam, nuance: “at one time, we could have seen an opposition between securities and real estate. Today, they are complementary. People want to secure their assets through diversification. They also want to stay invested in transferable securities. Real estate can be considered as a safe haven if it can be relocated from an asset base (liquidity) and if it offers an assurance of return. It is also highly taxed, in terms of transfer rights. registration. Why not turn to paper real estate, which also offers more diversification? “

Taxation, a risk?

According to Bruno Colmant, real estate taxation must be reviewed. “The current system is archaic. The registration fees at 12.5% ​​are crippling, they constitute a drain and penalize the mobility of people. Moreover, the last equalization of cadastral revenues dates from 1975, so it is a system very unequal. The worst would be to keep registration fees at their current level and tax actual rents. “

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