Investing in residential investment property: safer than ever!

As a real estate investor, you have three main priorities: your property must be rented out, the rent must be paid on time, and the value of your property must not decline. The good news is that the risk of any of these things going wrong is lower than ever. Rising rents are an added bonus. 

Still, recent media coverage has caused a great deal of confusion. Is now the right time to invest in real estate? The answer is a resounding yes! Residential investment property—that is, houses and apartments—offers tremendous opportunities. Offices and retail spaces are following a different trajectory, but that’s another story. Our CEO, Thomas Valkeniers, shares his insights. 

1. Vacancies? Not a chance!

Landlords fear vacancies, but the likelihood of that happening is extremely low these days. Simply because demand far outstrips supply. What was once true only in Flemish city centers is now evident everywhere.

The population in cities is growing rapidly, putting pressure on suburban areas, with Flemish Brabant standing out as the most notable example. Over the next ten years, population growth of more than 10% is expected there. Add to that an aging population and the rise in the number of single-parent families, and the demand for rental housing is skyrocketing.

At the same time, supply is declining. Tenants are less likely to move due to rising costs, building permits are scarce, and stricter energy standards have pushed many landlords out of the market. Fewer investors are entering the rental market due to higher interest rates and construction costs. The result? A single rental property easily attracts 50 to 100 prospective tenants. Vacancies? Non-existent.

2. Reliable tenants and rising rents

A landlord also wants the rent to be paid on time every month. With so many prospective tenants, there are more options than ever for selecting the right one. Those who choose wisely or hire a real estate agent minimize risks and can be sure the rent will be paid. Moreover, this offers the opportunity to choose a tenant who is likely to stay for the long term or treat the property with care.

Furthermore, rising demand and limited supply are driving up rental prices. Landlords are often listing their properties at slightly higher prices these days, as the likelihood of securing a higher rent is significant—after all, there are plenty of prospective tenants. In 2024, rents rose by an average of 6.1%, well above the inflation rate of 3.3%. This means that investing in real estate not only offers security but also generates additional returns. 

3. Value Preservation and Growth

As an investor, in addition to rental income, you also want to realize capital gains upon a potential future sale. Fednot, the Federation of Notaries, recently reported that real estate prices are falling in four out of ten Belgian municipalities. But context is everything: on average, real estate prices rose by 2.5% for apartments and 2.2% for houses in 2024. 

Price declines are occurring in isolated regions and municipalities with low-quality real estate, such as Saint-Gilles and Saint-Josse-ten-Noode, where prices fell by 12.3% and 15.9%, respectively. But these locations are well known. Those who invest in high-quality properties in prime locations will see their investment grow safely and profitably.

4. What about the interest?

However, every coin has two sides. Are rising interest rates and construction costs putting a damper on the celebrations? Not really. The average interest rate today stands at 2.6%, which is still historically low. In 2020, interest rates were exceptionally low (around 1%), but a further decline is unlikely. Given the economic and political uncertainty, the likelihood of an increase in the medium term is actually greater.

Construction costs are also not expected to fall any further. Stricter standards and more expensive materials mean that construction is only becoming more costly. Real estate is therefore more expensive than it was a few years ago, but certainly not too expensive. Prices will continue to rise.

In short, investing in real estate is now more than ever a safe and stable investment with minimal risk, provided you strategically choose the right location. That’s nothing new. The well-known principle of “location, location, location” remains the key to success. Those who invest wisely will enjoy a solid and sustainable return.