Belgian developer Immobel saw its net result swing to a negative €2.8 mln in the first half of 2023, compared to a profit of almost €9 mln in the same period a year before, largely due to 'a one-time cost linked to strategic cost cutting measures taken at the end of 2022'.
The company, which has a market cap of €350 mln and 59 projects under development encompassing 1.4 million m2, recently decided to shift its focus from the development of small residential projects in the suburban areas of Paris to the development of mixed-use projects in the centre of Paris and moved Immobel Capital Partners, its real estate investment management activity, from London to Brussels.
This led to a 30% reduction in annual overhead costs, cutting them from €50 mln to €35 mln. However, these actions resulted in a one-time cost of €9.3 mln during the first half of 2023, impacting the net result.
The market remains challenging, Immobel added, with the residential markets in Immobel's core countries remaining under pressure, mainly due to rising mortgage rates.
Sales of residential projects have significantly slowed down in France, Luxembourg, and Germany. Although the developments in these markets are mostly sold out, the company admitted that it is experiencing a significant slowdown in sales while the institutional investment market for offices is at a standstill.
However, Immobel’s completed and unsold office buildings are almost fully leased (i.e., Multi (Brussels), Cala (Liège), Central Point (Warsaw), and White Rose Park (Leeds)).
'Although the institutional investment market for offices is in a “wait-and-see” mode, Immobel's green offices in prime locations have been gaining momentum in terms of rental activity,' the company said in a statement.