Is investing in “recently renovated” existing apartments a good opportunity?
The real estate market is currently facing some challenges, but there is a silver lining for investors looking at recently built apartments. Despite the general cooling of the market, recently built apartments are proving to be a sought-after alternative to new construction, according to the findings of the latest notary barometer.
According to recent figures from 2023, the average price of a home in Belgium was 322,780 euros, representing a modest increase of 1.1 percent compared to the previous year. However, after adjusting for inflation, notaries report a 1 percent decline. For apartments, the average price was €264,792, an increase of 1.6 percent. Adjusted for inflation, this indicates a more modest price decline of 0.5 percent.
A striking indicator of market trends is the decline in sales activity. In 2022, 248,000 homes were sold in Belgium, while that number fell to 210,000 in 2023—a drop of more than 15 percent. In Flanders, the decline was as high as 16.9 percent.
The higher cost of new construction is a striking feature of these market dynamics. According to Bart van Opstal, a notary and spokesperson for Notaris.be, the share of new construction has declined from 20 to 15 percent over the past few years. The main reason behind this trend is the growing price gap between new construction and existing properties. New-construction apartments have risen in price significantly faster than existing apartments in recent years, partly due to increasingly stringent energy standards for new construction. These standards force developers to invest in energy-efficient technologies such as solar panels, heat pumps, or geothermal energy, which increases costs.
Despite these challenges, there appears to be an attractive segment for investors. Buyers are increasingly focusing on energy-efficient existing apartments that are about four to five years old. These apartments score well in terms of energy efficiency, often with a B or even A rating. The major advantage is that you can purchase such an apartment with only a 3 percent stamp duty, which is a significant advantage compared to new construction. Moreover, the energy performance is guaranteed until 2040.
Although there are currently slight signs of a recovery in the new-construction market, there are still projects underway that can benefit from the 6 percent preferential VAT rate for demolition and reconstruction. Although this rate is gradually phasing out, it still offers opportunities for savvy investors. Bart van Opstal warns, however, that while the recent drop in interest rates is favorable, it is not enough to bring about a drastic change. Nevertheless, the new construction market remains an attractive sector for investors seeking long-term value and energy efficiency.
