Why Invest in Belgium?

The Belgian Logistics Real Estate Market

Europe’s leading logistics real estate markets are Germany, the United Kingdom, France and the Netherlands. The bulk of logistics real estate investments is transacted in these countries. Yet one market that is often overlooked by Europe-wide investors even though it lies in the centre of the “Blue Banana” is Belgium. The country with its population of roughly 11.6 million inhabitants maintains close interdependencies with its neighbours. While its economic strength is high overall, there are stark differences from one region to the next. The Brussels metro area and Flanders, for instance, are home to a large number of hightech manufacturing companies and knowledgeintensive services, whereas Wallonia is still strongly defined by the structural change of its coal and steel industry.

Belgium has been an important trading and manufacturing location since the middle ages, and it remains a major transshipment centre. The port of Antwerp-Bruges counts among the most important seaports in Europe, second only to Rotterdam, and it plays a key role even for German companies. The latter group accounted for nearly 30 percent of the port’s transshipment total at the last count. Belgium boasts an attractive infrastructure, including a very dense road and rail network. In addition to the two major seaports, there are also numerous inland waterways used for commerce. The most important transshipment centres for air cargo are the airports in Brussels (Zaventem) and Liège.

The logistics sector plays an important role for the economic and commerce of Belgium. The country has a highly developed logistics industry that provides a wide spectrum of related services. The industry is particularly well-established in the Flanders region where it accounts for a major share of the GDP. On top of that, a large number of international corporates chose Belgium for setting up their European logistics centres.

The stock of light industrial and logistics real estate adds up to around 44.1 million sqm as of the first quarter of 2023, of which 70 % is located in Flanders, and about 15 % each in the Brussels metro area and Wallonia. In the years since 2019, the property stock in this segment has grown by about 14 %. Despite the enormous increase in building area added in recent years, the vacancy rate has declined steadily and was down to a mere 0.9 % today.

This is explained by the persistently strong demand for space, which has continued to set ever new records in recent years. The annual take-up over the past ten years averaged 1.73 million sqm, which breaks down into a take-up of 1.39 million sqm during the first half and 2.06 million sqm during the second half. Despite the economic jitters, take-up suffered only a modest decline in 2022, and even the first quarter of 2023 ended up generating a take-up of about 330,000 sqm, a level in line with the longerterm average. The keen demand was reflected in a steep increase in prime rents. In the logistics regions of Brussels and Antwerp, they rose by about one third each in the years since 2013.

So, what Makes Logistics Real Estate in Belgium an Attractive Investment?

Belgium’s centrality within western Europe and its well-developed infrastructure make it a highly attractive location. Due to its geographic proximity to other major European sales markets and to the seaports of Antwerp and Bruges, Belgium is a significant logistics site with plenty of potential.

The country is also home to a strong economy, its sector foci including the automotive industry, mechanical engineering, and food processing. These are industries that require logistics and warehousing units for the purpose of storing and distributing their products. Demand for logistics real estate in Belgium is increasing due to the growth of e-commerce and the rising significance of supply chain optimization. Add to this the planned investments in renewable energies, for instance in the form of offshore wind parks along the Belgian seaboard. The requirements that logistics infrastructure is facing keeps getting more complex and presuppose greater flexibility and efficiency.

The Belgian logistics real estate market offers investors attractive conditions, as logistics real estate is subject to growing demand while remaining in short supply. It is a situation that ensures rising rents and higher cash-on-cash returns. All things considered, the Belgian logistics real estate market presents a promising opportunity for investors to benefit from a favorable geographic location that combines with a robust economy and a growing demand for logistics real estate.