Luxembourg Property market - Market Overview H1 2019
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Luxembourg
Property market
Research Report
Market Overview H1 2019
© Auchan / Promobe
Developer : Ceetrus
Economic
Background
Beginning of 2019 numbers are confirming
the country’s sustained growth.
The global economic situation Luxembourg. A No-Deal Brexit will have favorable business environment. GDP
looks more volatile than ever from a very limited impact on Luxembourg growth is maintaining a good and
a business stand point. It would be economy if we compare to neighboring healthy rhythm at 2.6%, compared
foolish to think that we know what countries such as France and Belgium to the anemic 0.4% of the eurozone
2020 will bring. From Brexit chaos with both facing a -0.4% decrease area. On top of this, the Luxembourg
to a US/China trade war via possible forecast in their respective GDP. Government adopted six major policies
conflict in the gulf, the geological Luxembourg is viewed indeed as an (such as public transport gratuity)
situation doesn’t look very stable in alternative to London for investors and which will add an extra push on GDP
the short to medium term. companies in EU particularly in the and to employment. Unemployment
financial sector. The situation could stabilized at 5.5% this quarter and is
A Global Risks survey made by Oxford be very different for Luxembourg if forecasted to decrease by 0.5% by the
Economic on EU investors saw 13% a trade war intensifies because of its end of 2020.
of them viewing a No-Deal Brexit as trade exposure, a significant part of
a global economic risk. This number Luxembourg’s exports are directly Inflation experienced a significant
is growing as we get closer to 31st linked to global supply chain. decrease during the last 3 months
October 2019 (the current Brexit from 2.1% to 1.8% due to the 4.5% fall
deal deadline which the new British Despite the clouds on the horizon, of oil product prices. The public debt
Prime Minister has declared as final). fundamentals stayed positive in bottomed out at 21.3% of GDP, as ever
On top of this, 41% of respondents Luxembourg during the first half of far below the eurozone average of
see trade war as a major risk for the 2019. The stable political situation and 86.1% (Eurostat).
global economy for the next two years the government proximity to economic
and this is perhaps the biggest risk for actors helped Luxembourg maintain a
Sources: STATEC
Economic
Snapshot
Inflation Population
2018 H1 2019 2018 H1 2019
2,1% 1,8% 602.500 614.000
Structure of GDP
by output
Industry
Agricultural
11,6% 0,3%
Services
88,1%
€
GDP Increase Unemployment Rate
+ 2,6% 5,5%
Sources: STATEC
Office
Market
Speculative development remains
very limited this year.
We saw the total take-up reach 23,946 The average size per deal falls almost biggest completions are coming from
sq.m. for Q2, which brings the total H1 by half to 394 sq.m. compared to the extension of the European Court
take-up to 41,334 sq.m. On the 105 the first half of last year where we of Justice (39,750 sq.m. in Kirchberg),
transactions we listed, only six were reached 703 sq.m. If we remove the Casa Ferrero (30,000 sq.m in Airport
above the 1,000 sq.m. threshold. The IWG Group transactions from the list, district) and Royal Hamilius (10,000
biggest transactions were Spaces this number falls further to 320 sq.m. sq.m. in CBD).
(IWG Group) in Impulse (Station) Transactions from Business Services
Speculative development remains
for 6,453 sq.m., Société Nationale companies are the lowest at 297
very limited at only 18,000 sq.m. in
de Crédit et d’Investissement in the sq.m. on average.
which we have considered Quatuor
Villa Servais (CBD) for 2,240 sq.m.
Despite the robust economic health (4,600 sq.m. in Cloche d’Or) and the
and Regus (IWG Group) in Oksigen
of Luxembourg, office take-up seems speculative parts of Naos (in Belval)
for 1,925 sq.m. (Kirchberg). Triton
to have slowed down in the first half and Zenit (in CBD) with respectively
International also moved into
of this year. The Global context is an 4,600 sq.m. and 4,500 sq.m.
Oksigen for the same amount of
important factor to consider, and
space. In terms of rents, we see an upward
companies might want to wait to see
pressure in the CBD where we see
Looking at details of occupant how the current chaotic situation will
some transactions approaching 52€/
types we see Banking and Finance evolve before taking any decisions
sq.m in the coming months. The
representing 46% of the transactions. to move offices. In other words, it
same upward pressure exists on the
Flex operators, also known as co- impacts negatively the decision
Cloche d’Or and Kirchberg where
working and business centers, are process and keeps take-up at a low
prime rents could increase again in
the second biggest type with 21% level, hopefully for a limited period
the next quarters. We will see in the
of all the transactions, boosted by
Vacancy rates are still very low despite second half of 2019 if this upward
both IWG Group transactions (8,378
increasing slightly from 3.4% to 3.6% trend is confirmed.
sq.m. in total). Co-Working is in an
thanks to two major completions:
evolving trend in Luxembourg and
Impulse in Station and Staccato in
we should see more and more similar
Kirchberg. For the second half of the
transactions in the coming months.
year, 165,000 sq.m. of the new offices
Business Services is the third category
should be completed where 88% of
with 5,786 sq.m. of transactions in H1
it is non-speculative. In this total, the
(representing only 14% of the total).
All rents quoted are exclusive of VAT.
Office
Snapshot
Take-up (in sq.m) Number of Deals
2017 2018 2019
& Average Size per Deal
300.000
2017 2018 H1 2019
250.000
200.000 245.561
218.368
150.000
143,400 Average Size: Average Size:
Average Size:
100.000
109,734 761 sqm 883 sqm 394 sqm
50.000
41,334 Volume: Volume:
0 287 278 105
H1 H2
Total Investment Prime rent (€/sq.m) Number of transactions
Volume Lux (€) (excl. V.A.T.) > 1.000 sq.m:
629 Mln 50 6
Stock (sq.m) Prime yield Office Vacancy rate
4 Mln 4% % 3.6%
Prime rents (€/sq.m) Take-up by sector
(excl. V.A.T.) Education, Health &
Insurance & Pension Funds Social
Periphery Kirchberg 3% 3%
22,5 36 Manufacturing
6%
CBD
Other
50 Station
7% Banking &
35
Finance
46%
City Belt
Business Services
28 Cloche d’Or/ 14%
Esch/Belval Gasperich/Howald
Real Estate Activities
24 30 21%
Retail
Market
The outlook for rents applicable to
prime locations remains stable, whilst
rents for secondary locations are under
downward pressure.
Total full take-up (Retail Warehouse, project of shopping centers and still available for in this giant retail
Shopping Center ad High Street malls during the last months, such complex located in the center of
included) for the first 6 months of as Auchan Cloche d’Or. Transactions Luxembourg.
2019 reached 14,261 sq.m., below the in Shopping Centers are on average
In terms of completion this year,
29,133 sq.m., of H1 2018. The average smaller in size compared to Retail
we saw the opening of Cloche d’Or
take-up over the last 5-years (H1 Warehousing. The Trafic transaction
Shopping Center in May, representing
only) stands at 21,513 sq.m. where in Belval Plaza II was the biggest at
more than 75,000 sq.m. of stores
Retail Warehousing represents 54% 1,876 sq.m. followed by Action in
on which 95% are already rented
of the total. The slowdown could the Boomerang Shopping Center in
and opening this year (Auchan,
be explained by the fact that Retail Strassen at 1,093 sq.m. and C&A in
AS Adventure, Namur, Sephora,
Warehousing is not as active as it Knauf Schmiede at 976 sq.m.
Les Groupe H&M avec H&M, Cos,
has been historically. This category
A half-year volume of 4,746 sq.m. was Arket, &Other Stories, Weekday
represents only 15% of the H1 take-
recorded for the High Street category, and many others). More than 50%
up (or 2,003 sq.m.), very low if we
14% under its 5-year H1 average. The of these stores are new ones in the
compare to 2017 when it reaches
launches of a Delhaize Premium, Luxembourg retail landscape. We
30,900 sq.m.
a FNAC and a Galeries Lafayette have still in the pipeline for this year
Take-up in Shopping Centers grew inside the ROYAL-HAMILIUS project the Royal Hamilius (17,000 sq.m.) and
by 50% versus the last 5-year H1 in Q4 are bound to lead to a much infinity Shopping (6,500 sq.m.) both
average and represents 50% of the higher volume in the second part of planned for the end of the year.
total take-up. This trend is clearly 2019. Retail spaces from 30 to 630
linked to the completion of several sq.m. on single or double floors are
Royal-Hamilius, Luxembourg Infinity Shopping, Luxembourg
© Codic Group – Royal-Hamilius Retail © Immobel – Infinity Shopping
All rents quoted are exclusive of VAT.Retail
Snapshot
Yearly Take-Up (year-to-date)
2017 2018 H1 2019
Take-Up (sq.m) 48.200 37.650 14.261
Number
of Deals 70 74 35
Average Size
per Deal (sq.m) 680 509 407
Prime Rent (€/sq.m) Prime Rent (€/sq.m) Prime Rent (€/sq.m)
High Street Shopping Centres Retail Warehousing
(excl. V.A.T.) (excl. V.A.T.) (excl. V.A.T.)
2017 130 2017 110 2017 20
2018 130 2018 110 2018 20
Q1 2019 150 Q1 2019 110 Q1 2019 20
5Y H1 Take-Up (sq.m) 5Y H1 Number of Transactions
37.659
48
40.000
50
35.000
45
43
29.133 5 year
30.000 average 36 35 35
40
25.000 5 year
average
35
31
30
20.000
17.482 25
15.000 13.589 14.261 20
9.702 15
10.000
10
5.000
5
0 0
17
19
14
15
18
19
18
16
17
14
16
15
20
20
20
20
20
20
20
20
20
20
20
20
H1
H1
H1
H1
H1
H1
H1
H1
H1
H1
H1
H1Residential
Market
increasing demand for existing apartments
in comparison of new ones.
Sales of apartments 2014 and 2018. On the contrary, 29% to reach €1,542,371 on average
growth of existing apartment sales for a house (or €7,441/sq.m.). The
Sale price of existing apartment units
accelerated reaching +7.4% between average price for the whole country is
are booming across the country. If
2015 and 2018. The bank BIL in its last €784,162 for a house or €4,562/sq.m.
we compare 2017 to 2018 we see a
Immo-Index from May 2019 explained
growth of 14% for Luxembourg-city Districts where prices for a house
that the supply of existing apartments
ranging from €5,465/sq.m. to €11,173/ were the highest are in the north-east
for sale has increased along with
sq.m.. . The rest of the country is of Luxembourg-city in Niederanven
prices but that the supply of new
experiencing the same trend with for where the average price reached
apartments for sale has slowed down
example +15% in Bertrange (€7,479/ €1,837,880 (or €6,746/sq.m.). For this
along with a deceleration of price
sq.m.), +8% in Strassen (€7,367/sq.m.) district average house size is well
increases.
and +9% in Leudelange (€6,662/ above the average which is explains
sq.m.), So why do we see an increasing the high overall price, and the slightly
demand for existing apartment lower than average price per square
Sale price for new apartment units
instead of new ones? Taxation metre.
are also increasing but at a lower
changes in 2015 could be one of the
pace than the existing ones. The Mobility problems around
reasons. The VAT rate change from
growth between 2017 and 2018 Luxembourg-city also add another
3% to 17% on investments combined
is +9% reaching €8,846/sq.m. in point of pressure on prices. Citizens
to a lower rate on renovation projects
Luxembourg-city. Country-wide we of Luxembourg want to be in areas
redirected investors towards
see +12% in Bertrange (€8,675/sq.m.), with easy access to their workplace
existing apartments and mainly
+9% in Hesperange (€7,655/sq.m.), and are more and more willing to pay
in Luxembourg-city where the
+ 9% in Bettembourg (€6,044/sq.m.) the price for this. We see a consistent
concentration of apartments in prime
and +8% in Mersch (€6,364/sq.m). growth in house prices in all the
locations is the highest.
districts surrounding the capital city.
So what can explain this growth
discrepancy between new and
existing apartment growth? Sales of houses
If we look closer at the STATEC House sales have experienced the
data, we see that the growth of new strongest growth if we compare
apartment sales decelerated these 2019 to 2018. Luxembourg-city
last year’s reaching +4.8% between house prices jumped more than
Sources: Observatoire de l’habitat
Sources: BIL IMMOindex, May 2019
All rents quoted are exclusive of VAT.Residential
Snapshot
Sales of Apartments Sales of Houses
Average price per sq.m Average price per house
6.332
6.143
5.741
5.576
4.965
4.729
2016 3.795
Country Country 2017 4.029
2016
2017
2018
2016
2017
2018
2018 4.308
Existing New
8.846
8.122
8.099
7.731
7.074
Luxembourg Luxembourg
2016 6.062
5.590
City City 2017 6.325
2018 7.085
2016
2017
2018
2016
2017
2018
Existing New
Average selling price of existing apartments
(based on announced prices)
country average:
5,576 €/sq.m
Junglinster
Lorentzweiler
insuffisant sales volume
Steinsel
Kopstal
Walferdange Niederanven
less than 4 000 €/sq.m
Mamer
Strassen Sandweile
Luxembourg r
Bertrange Ville Lenningen from 4 000 to 4 499 €/sq.m
Contern
Hesperange
Leudelange
from 4 500 to 4 999 €/sq.m
Roeser
from 5 000 to 5 999 €/sq.m
more than 6 000 €/sq.m
Sources: Observatoire de l’habitat
Sources: Paperjam Plus, Real Estate, July/August 2019Investment
Market
Office transactions stay the main
driver of growth in Luxembourg
While 2019 started slowly, we saw If we dive into the detail of the the market growth potential in
the third biggest Q2 ever in terms different types of transactions, we Luxembourg are attracting more and
of transaction volume with €445 see that Core type represents 65% of more investors from the southern
Mln invested. In total, we reached the total volume (from 58% in 2018). neighbour. Belgians and domestic
€629 Mln for the first half of the year. The focus on low risk assets (such investors close out the podium with
Total investments are 21% above the as single-tenant in most premium respectively 16% and 14% of the
5-year H1 average, an optimistic sign locations) remains. The Deloitte investments.
for the second part of 2019. Office transaction is the best testimony of
Good economic conditions, low
transactions stay the main lever of this trend. Next to Core, Value Added
financial rates and the growth of the
growth for 2019 accounting for 99% is the second favorite with 24% of the
proportion of Core type investments
of the total amount, a record.. Offices total.
are keeping yields at a historically
are still the asset class enjoying the
Luxembourg market is attracting all low level. Prime office buildings in
most liquidity.
range of investors from all around the strong locations are trading at a 4%
The biggest transaction accounted world. La Française did the biggest yield for short term lease, with the
for almost 40% of the total volume transaction by investing in D-Square same pressure in the City Belt and
by reaching approximatively €250 building for Korean money. This is the Periphery. We didn’t notice any
Mln. The French investor La Française the first time a Korean investor (and change for Logistic and Retail yields
acquired the Deloitte building in the an Asian one to a larger extend) is because of the lack of transactions in
Cloche d’Or. The second largest is by entering in the Luxembourg property the first half of 2019.
Fidelity Investment that acquired the market. French investors are staying
K2 Allegro in Kirchberg for €125 Mln. the biggest players. Proximity and
5Y Half-Year Investments Volumes and Yields
900 6%
800
5%
700
600 4%
604
500
3%
400
170 175 445
300 2%
397
200
1%
100
0 0%
2015 2016 2017 2018 2019
Q1 Q2 YieldInnovation
Focus
How technology is driving
transparency in real estate
Big data and the technology driving it, are promising
huge leaps forward for the real estate industry.
From buildings filled with sensors But significant change is on the Long-term promise, short-term
tracking employees, to software that horizon. In the last two years, $6 problems?The path to greater
monitors reams of lease documents, bn has been raised by so-called transparency nevertheless has its
new technologies are rapidly being proptech start-ups – companies hurdles.
incorporated across the commercial developing technologies dedicated to
Accurately monitoring real estate
real estate industry. No two tools are the property industry. More than 250
markets requires high-quality insights
the same, but they share a common start-ups are developing and rolling
from strong data sets. However, the
output: data. out proptech around the world. New
rapid expansion of proptech tools
technology platforms and services
While broad-based data collection has provoked concern around the
will give investors, tenants and
requires requisite caution, the consistency and reliability of some
property managers access to more
eventual outcome is likely to be of the data, a natural side effect when
easily-manageable datasets, allowing
greater transparency, especially in some of the new data providers rely
for better-informed decision-making
markets where information remains on scraping online sources.
processes.
tightly held, according to JLL and
The ownership of information is also
LaSalle’s Global Transparency Index. At the other end of the spectrum,
a key concern. Property owners and
Luxembourg scored 32nd, not bad blockchain technology could lead
managers can collect vast amounts
but still some room for improvement. to greater global standardization in
of data on tenants through sensors,
all areas relating to property, from
“Property is in the midst of a internet-linked devices, and video
city planning to environmental
technological leap,” says Jeremy feeds. If the information is tightly-held
reports. Trials have already started.
Kelly, global research director at JLL. among operators however, it could
Dubai plans to record all real estate
“The adoption of new technology limit the broader benefits of new
transactions on blockchain by 2020.
platforms generates new and more tools on wider market transparency.
Estonia is also using the technology
easily-accessible market data, Privacy and confidentiality concerns
to authenticate property registries.
which is key for overall real estate are also clearly pertinent with much
transparency.” tighter regulation and corporate
policies heading firmly in the
opposite direction .
Publicly-shared data may expand the
size of the market and make it more
efficient. Proptech data may have
this potential, but this outcome is
not guaranteed unless the firms who
control the data are willing and legally
able to choose to take this path.
As real estate becomes a mainstay
allocation for almost every
institutional investor, access to
consistent and reliable information
is a priority, but remains very difficult
to fulfill.Offices Luxembourg
Atrium Business Park
41 Rue du Puits Romain
L-8070 Bertrange - Luxembourg
T: + 352 - 46 45 40
www.jll.lu
Contacts
Angélique Sabron Lotfi Behlouli
HEAD OF MARKETS DIRECTOR OFFICE AGENCY
LUXEMBOURG LUXEMBOURG
+352 46 45 40 72 +352 46 45 40 58
Angelique.Sabron@eu. jll.com Lotfi.Behlouli@eu. jll.com
Robby Cluyssen Vincent Van Brée
SENIOR CONSULTANT HEAD OF CAPITAL MARKETS
RESIDENTIAL AGENCY LUXEMBOURG
LUXEMBOURG + 352 46 45 40 35
+352 46 45 40 52 Vincent .VanBree@eu. jll.com
Robby.Cluyssen@eu. jll.com
Stéphane Colle Dimitri Collignon
SENIOR ANALYST DIRECTOR RETAIL AGENCY
RESEARCH BELUX LUXEMBOURG
+352 46 45 40 + 352 46 45 40 57
Stephane.Colle@eu. jll.com Dimitri.Collignon@eu. jll.com
www.jll.lu / Jones Lang LaSalle
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