BELGIUM Trends and Developments Contributed by: Pieter Puelinckx, Yves Moreau, Bénédicte Deboeck and Melissa Verplancke, Linklaters
The Latest in Real Estate Law in Belgium Introduction In 2024, Belgium’s real estate market faced ongoing economic challenges due to geopo - litical uncertainties. However, a critical turning point occurred when central banks began cutting interest rates in June 2024. This move positively influenced market sentiment and lifted investor confidence. As a result, Belgium’s inflation rate decreased to 3.2% in October and November 2024, with forecasts suggesting a further decline to 1.5% in 2025. The global capital market was generally stag - nant, and Belgium mirrored this trend. Despite the improved conditions from the interest rate cuts, buyers remained cautious, preferring to delay early acquisitions until prices stabilised. Sellers, on the other hand, hesitated to accept lower valuations unless immediate liquidity was needed. Yet, notable transactions, including the European Commission’s building sales, have supported investment figures. Performance varied across sectors: industrial & logistics and hotels performed well, and there was increasing interest in niche real estate sec - tors such as data centres and student housing. Environmental, social, and governance (ESG) factors have become increasingly important in tenant decision-making, particularly within the office and industrial & logistics sectors. Regula - tory frameworks like the Corporate Sustainabil - ity Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), alongside regional regulations, are reshaping the market to prioritise sustainable practices. A growing area of concern is cybersecurity risk, with potential financial and operational disrup - tions heightening awareness.
Finally, the Belgian government has introduced reforms in its governmental agreement aimed at enhancing the real estate sector. These reforms focus on tax and regulatory measures that pro - mote sustainable practices within the industry. Belgium’s new government Belgium’s new government has unveiled a series of tax and regulatory measures aimed at reshap - ing the real estate sector. These initiatives are designed to encourage sustainable practices and enhance consumer protection. While the exact implementation dates remain uncertain, stakeholders in the property market should con - sider these changes when planning construction or renovation projects in Belgium. One of the key measures is the extension of the reduced VAT rate of 6% for demolition and reconstruction projects. This rate will now apply to all such projects, including those marketed by professionals. However, the government has tightened the eligibility criteria, reducing the maximum living area from 200m² to 175m². This change aims to broaden the scope for renova - tion while maintaining current social benefits. These provisions are set to replace temporary regulations that expire on 30 June 2025, which currently offer the 6% VAT rate in 32 urban areas only. In a move to promote ecological upgrades, the government plans to reduce the VAT rate for installing heat pumps from 21% to 6% for the next five years. Conversely, VAT for installing fossil fuel boilers will increase from 6% to 21% for homes over ten years old. This shift aims to make non-ecological products less attractive financially, steering consumers towards greener alternatives for their heating installations.
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