Real Estate or ETF?

Belgium has a special relationship with bricks. « Een steen in de maag » — a brick in the stomach — the expression alone summarizes a deep cultural conviction: bricks and mortar are safe, concrete, and real.

But is it really the best investment for you? The honest answer is: it depends. Not on the markets, not on interest rates — but on what you are willing to put in besides your money.

Returns — comparing like with like

With equal capital and no loan, Belgian residential real estate has historically delivered a total return of 6% to 8% per year: 3% to 4% property value appreciation, plus 3% to 4% net rental yield (after charges, vacancies, and maintenance).

A global ETF like IMIE has historically delivered 7% to 9% per year over the long term.

The observation: with identical capital and no leverage, both strategies offer comparable returns. The fundamental difference lies elsewhere — in concentration risk, liquidity, and the time you dedicate to it.

The superpower of real estate: leverage

This is the strongest argument in favor of real estate — and the only one that ETFs cannot easily replicate.

A bank will never lend you €200,000 to buy ETFs. It will do so for bricks.

This is where real estate mathematically beats ETFs: not in the property's yield, but in the amplification by bank leverage.

The flip side: leverage amplifies gains in both directions. An apartment that loses 20% in value with an 80% loan wipes out your entire deposit.

The Interest Rate — the Variable That Changes Everything

Leverage is only beneficial if your net return exceeds your borrowing cost. This is known as the positive leverage effect.

Between 2015 and 2021, Belgian mortgage rates oscillated between 1% and 2%. Real estate leverage was then exceptionally powerful — borrowing at 1.5% to generate 5% net represents a spread of 3.5 points.

Since 2022, rates have risen sharply. In 2026, a Belgian mortgage is negotiated between 3% and 4% depending on the profile. With net rental yields often between 2.5% and 3.5% in major Belgian cities, the spread has become neutral or even negative.

This reversal doesn't mean real estate is a bad idea — but it means the thesis of « magic leverage that always beats ETFs » is much less obvious than it was 5 years ago.

Structural advantages of Belgian real estate

Belgium offers a tax framework that has historically been favorable to private landlords:

Taxation on cadastral income, not real rents:

If you rent to an individual for private use, you are not taxed on the actual rents received, but on the indexed Cadastral Income (CI) increased by 40% — often much lower than the economic reality.

No capital gains tax:

In Belgium, the capital gain on the resale of a property held for more than 5 years is not taxed (in normal management). This is a considerable advantage compared to many neighboring countries.

Protection against inflation:

Belgian leases allow for annual indexation of rents based on the health index. The value of bricks and mortar structurally follows inflation over the long term.

Psychological shield:

A property cannot be sold on impulse in 30 seconds. This illiquidity — often presented as a flaw — paradoxically protects the investor against their own reactions during crises.

What real estate really costs you

The frictions associated with real estate are massive and often underestimated.

Entry costs — the invisible bill:

In Belgium, for an investment property (excluding own residence), registration duties amount to 12% in Flanders, 12.5% in Brussels and Wallonia. With notary fees and mortgage deed costs, you lose about 15% of the property value on the day of purchase. On €250,000, that's €37,500 gone before the property even generates a single euro.

With an ETF: 0.12% TOB. On €250,000, that's €300.

Absolute illiquidity:

If you need €10,000 urgently, you cannot sell the toilet in your apartment. With an ETF, you sell exactly what you need, and the money is available in 48 hours.

The true cost in time:

Rental real estate is not a passive income. Managing tenants, vacancies, water leaks at 10 PM, general meetings of co-owners, energy standards compliance (mandatory PEB), building manager. It's a second part-time job. An ETF requires 5 minutes a month.

Invisible recurring costs:

Annual property tax, fire insurance, non-recoverable co-ownership charges, provisions for major works — these costs silently eat away at the gross return.

So, which one to choose?

These are two different strategies aimed at different profiles — not direct competitors.

The real question is not « real estate or ETF? » — it's « do I have the capital, the time, and the appetite to manage a property? »

If the answer is yes to all three: real estate with leverage can be an excellent complementary strategy. If not: ETFs do the job without friction, without stress, and with comparable returns.