Savills latest Brussels office market report forecasts a total transaction value of €2bn for 2011, following a first half figure that represents a 96% increase on total investment in 2010.

The research confirms that €943 million was transacted in the first half of the year, and that domestic investors accounted for 60% of acquisitions with 30% German and 11% French. However Savills says that investors have shown hesitation over the summer with only one deal during Q2 transacted above €50 million at Espace Orban Complex – it sold for €80 million reflecting a net initial yield of 6.35%. The firm predicts that global market volatility will see long term yields hold at 5-5.25% with no further compression anticipated in the short term.

Sheelam Chadha, head of Savills research in Brussels, says: “The upturn in the investment market seen in Q1 has persisted in Q2 but on a more moderate level. With lettings market figures below average and investor hesitation over the global economy, we do not expect the second half of the year to significantly exceed the first half in terms of total investment volumes.”

Savills data shows that lettings take up has dropped by 48% comparing Q211 to Q210 year on year totalling 152,000 sq m, with no transactions exceeding 5,000 sq m. Top quartile rents have however increased by 4% to €219/sqm/year, with prime rents stabilising at €295 sqm/year.

In terms of development completion, Brussels has not seen any new stock come to the market in Q211 and total annual figures are anticipated to be significantly lower than the three year average of 400,000 sq m pa. Total stock now stands at 13,600,000 sq m with 70% of future stock delivered between 2011-2013 to be located in CBD.

Chadha continues: “An easing in the development pipeline will help the market rebalance but this is not anticipated to take effect until late 2012.”

View the full Brussel Office Market research report.