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BGP Peer IP addresses are used for establishing BGP (Border Gateway Protocol) peering between your Azure Virtual Network Gateway and your on-premises router.
They must be unique and routable; they should not overlap with your VNet address space or the GatewaySubnet.
Since your VNet is 172.16.0.0/24, you cannot use any IP address within that range for your on-premises BGP Peer IP. You mentioned trying 172.16.0.11, which is also within your VNet and will cause the same error. You need to select a private IP address from a different range that is routable from your on-premises network.
On your on-premises network, create a small subnet specifically for BGP peering. for example, you could use 192.168.100.0/30. This range provides 4 IP addresses, with 2 usable for the BGP peers and assign one of these IPs to your on-premises router's BGP interface.
In your Azure Local Network Gateway (Lgw), specify the on-premises BGP Peer IP address from the subnet you created and configure the address space of the Local Network Gateway to represent the networks you want to advertise from on-premises to Azure. This should not include the BGP peering subnet.
Make sure the BGP Peer IP address of the Virtual Network Gateway is correctly configured (172.16.0.62 in your case) and make sure the ASNs match on both sides.
Reference: https://learn.microsoft.com/en-us/azure/vpn-gateway/vpn-gateway-bgp-overview
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