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The situation is quite different between Brussels’ office districts.
There is a (re-)concentration of the activity trend in the Central
Business District, to the detriment of the Decentralised districts and
the Periphery. The Airport district witnesses better performances
thanks to available spaces in recent buildings and an enhancement
of the accessibility of the area.
Regarding the vacancy, the trend is still following a slight and con-
tinuous downward movement. At the end of 2014, the vacancy rate
stood just below 10%, for the first time for a while. As is the case for
the take-up, the situation is contrasted between the CBD (vacancy
rate around 8% on average) and the rest of the Brussels office
markets (16% on average). The decrease of the vacancy is mainly
recorded in the most recent buildings. There are currently less than
100,000 sq m available in grade A buildings.
Nevertheless, projects currently under development or in the pipe-
line are numerous and represent more than 400,000 sq m which
should enter the market in the next three years. Combined with
the important restructuration processes in the public and banking
sectors and a peak which seems to have been reached in the
reconversion process of obsolete office buildings, the vacancy rate
should start to increase again in the coming months, both in the
CBD and in the rest of the Brussels market.
2015 should again observe contrasted trends on the occupier
market.
Healthcare real estate
The value of Cofinimmo’s healthcare portfolio amounts to slightly
over 40% of the company’s total portfolio, almost on an equal foot-
ing with the office share. This increase is mainly due to Cofinimmo’s
property development operations in Belgium (€25 million) and its
acquisition transactions in the Netherlands, Germany and France
(€72 million).
The Belgian market is again on the rise in 2014, with investments of
about €240 million compared to €100 million in 2013 and €260 mil-
lion in 2012. Long-term rental agreements continue to attract inves-
tors seeking long-term returns, and being encouraged by lowering
interest rates and the clearance of a few uncertainties thanks to
the application of the sixth Belgian State reform to healthcare.
The competence with regard to healthcare and assistance for
the elderly was handed over by the Federal Government to the
Communities effective 1 July 2014; the related budget, however, was
not passed on until 1 January 2015.
Meanwhile, all decision-making powers (including pricing for
residents) regarding rest and nursing homes for the elderly have
been shifted to the Community level. This means that, in future,
the Communities have sole discretion in managing the creation of
extra rooms or beds in rest homes, selecting residents, determining
prices and reimbursement and so on. Before, those powers were
dispersed: while the Regions dealt with the accommodation of
structures like rest and nursing homes for the elderly, healthcare
funding was entrusted to the Federal Government level, with the
national sickness and invalidity insurance institution (RIZIV/INAMI)
being involved. Funding per resident was determined on the basis
of the resident’s level of dependency and the qualified nursing per-
sonnel required to provide sufficient care to the resident. From 2015,
the Communities are funded according to the growth of Belgium’s
GDP, the percentage of elderly people within the relevant territory,
and even inflation, if any.
Today, 17.65% of the Belgian population is older than 65. In 2023,
1 out of 5 will be older than 65. In Belgium, life expectancy at birth
is 80.47 years, significantly up by about 80 days compared to the
previous year, and the strongest increase in life expectancy is
recorded in Brussels, up by close to a half year. So, after a slight dip
in 2012, life expectancy is on the rise again.
The most recent figures made available by Belgium’s national
sickness and invalidity insurance institution show a total of slightly
over 140,000 official beds in Belgium across 1,527 rest homes;
54.07% in Flanders in 781 houses, 35.26% in Wallonia in 598 houses,
and 10.67% in Brussels in 148 houses. No more than 600 houses
(39.27%) are privately owned/of a commercial nature, whereas 533
are run by non-profit associations and 395 belong to social service
departments (currently at town level – OCMW/CPAS). The sector is
characterised by concentration of players with large groups includ-
ing Armonea, Orpea, Senior Living Group and Senior Assist.
All those houses have a very high occupancy rate (almost 100%)
and statistics indicate that a high number of Belgians are waiting
to be assigned a spot in a rest home (for the elderly).
In 2010, the Belgian Health Care Knowledge Centre (KCE), in coop-
eration with Belgium’s Federal Planning Bureau, made a scientific
estimate of the number of rest home beds needed in the course of
the following 15 years: the total of beds needed by 2025 would be
within the range of 149,000 – 177,000 beds, meaning, depending
on the scenario chosen, an additional 1,600 up to 3,500 beds each
year. It should be noted that the minimum of 149,000 beds would
only be sufficient if the home care offered would grow 50% above
what is strictly needed, taking the expected ageing into account.
Distribution network real estate
(Pubstone & Cofinimur I)
The distribution network properties owned by Cofinimmo repre-
sents around 16.7% of its portfolio at the end of December 2014.
Cofinimmo’s subsidiaries (Pubstone for the pub and restaurant
sector in Belgium and the Netherlands; Cofinimur I for the store and
agencies sector in France) present a diversified risk profile, both
geographically and between commercial real estate and invest-
ment properties with redevelopment potential.
As was the case last year, the two portfolios remained relatively
stable throughout 2014. The fair value of assets held in the distri-
bution network portfolio represents a fair value of €533.5m, even
slightly increasing during the year despite the sales of several
non-strategic assets.
Cofinimmo seeks secured investments in this sector (character-
ised by long-term leases with single occupiers, benefitting from a
quite stable financial situation), relative low rental income and fairly
attractive acquisition prices per square metre. Sale and leaseback
operations for assets with attractive locations, allowing a multiplic-
ity of future uses are preferred. However, assets from this part of
the portfolio could also be sold on an individual basis to small local
investors.
Opinion
We confirm that our valuation has been done in accordance
with national and international market practices and standards
(International Valuation Standards issued by the International
Valuation Standards Council and included in RICS Valuation –
Professional Standards January 2014, the Red Book of the Royal
Institute of Chartered Surveyors).
The Investment value (in the context of this valuation) is defined as
the amount most likely to be obtained at normal conditions of sale
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