Diversification of your portfolio

In terms of investment, diversification remains an important element, as experience has shown in recent years. We observe that the standard used by the Swiss Private Bankers, known for their prudence, affects 40 to 50% of assets in real estate.

Return on invested capital

The calculation of the yield in real estate is set by juxtaposing 2 elements: the rental yield + capital gain.

Rental yield

The yield is calculated by the formula:

Annual rent / Purchase price + acquisition costs

Example of rental yield calculation

Rent : 850€/month or 10.200€/year

Purchase price: : 200.000 + 27.000€ notary and registration fees

Yield =
10.000€ / 227.000€
= 4.5%

In general, the yield of a property is calculated according to several criteria:

  • Location
  • Type of tenants
  • Contract continuity
  • Condition of the building
  • Rental vacancy

In residential real estate, it is generally situated between 3% and 5% and can even reach 6% ou 6,5% in the case of renting furnished properties.

Capital gain

The real estate "track record" shows that a property gets to be appreciated as the years go by.

The average annual capital gain over the last 30 years on the Belgian residential market has reached 5%! We believe that the capital gain over the next 20-30 years will remain around 3.5%.

We can therefore summarize the 2 previous points:

4.5% RETURN ON CAPITAL (on average) + 3.5% CAPITAL GAIN (average value) = 8% TOTAL RETURN.

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