PLACE FINANCIÈRE & MARCHÉS — Marchés financiers

Michel van Geyte (Leasinvest)

“The true value is always ‘what a god damn fool will pay for it’”


Michel Van Geyte (Leasinvest): “Yes, I am afraid of a crash under these circumstances, but I am feeling ashamed to mention it.” (Photo: Maison Moderne)

Prior to the Club Talk – Real estate market: Evolution & Trends organised by the Paperjam Club on Thursday 13 February at Centre événementiel Ginkgo, one of the speakers, Michel Van Geyte (Leasinvest), shares his vision of the real estate market.

How does the internationalisation of investors affect interest rate developments?

Michel Van Geyte (Leasinvest). – “Investors are not looking for better returns when they invest abroad. They are looking for geographical diversification, risk balancing to invest in growing & stable countries, etc. What we see for a couple of years in Brussels and now recently in Luxembourg is that Asian money (Korea) is targeting big volumes (look at the recent transaction of the Finance Tower in Brussels for 1.2 billion, the Engie towers for 450 mios, and in Luxembourg the Deloitte building at a yield below 4%). But over the last 20 years we’ve seen Danish, Spanish, Arabian, Irish, Icelandic, and now Asian money. It is not new that international investors are investing in Europe.

How can we assess the “true value” of real estate today?

“The true value is always ‘what a god damn fool will pay for it’. We see here in Luxembourg transactions of buildings bought two years ago and already re-sold at 30% more because real estate yields decreased with more than 150bps. Real estate always had the characteristics that it is a long-term investment but I see trading within short cycles. Does that mean that we are trying to catch up the end of the bubble? Or has the bubble become the new normal? In all European markets, value of the real estate has increased because stocks, bonds, gold, and certainly cash is not an option. So yes, as we didn’t believe in a Japan scenario, more and more financial and economic people are more and more convinced of this scenario. Markets believe that short-term interest rates will remain below zero until 2024. There will be more money coming to invest in real estate which will raise prices even further.

Can real estate prices continue to rise without reaching a break-even point? Are we preparing a new real estate crash?

“We need to make a difference between prime real estate, which continues to increase, and all the other real estate. What about the retail assets? Is there an opportunity to invest or will this completely collapse? I don’t think so but there is certainly an oversupply which will lead to lower values. Moreover, we don’t take two main elements in mind which are the not-eternal financing of the banks and the risk element, especially the tenant risk. Yes, there will be a threshold, but will this be 1% as in the main streets of Zurich? Better than nothing but still bricks? We are breaking the threshold in Brussels and soon in Luxembourg of 3% gross yield on e.g. prime office buildings. If the expectations of certain funds are IRR’s of 2%, then we know where we are. Yes, I am afraid of a crash under these circumstances, but I am feeling ashamed to mention it.”

You can register for the Club Talk – Real estate market: Evolution & Trends on