The bright future of real estate in Luxembourg

Investing in real estate in Luxembourg is booming business. With levels of investments increasing rapidly year on year, the country’s corporate property market is attracting more and more international attention. Real estate Agency INOWAI are experts in the field of commercial (as well as residential) property services. They will tell us all about Luxembourg’s real estate success.

The number of investments carried out last year has exceeded a billion euros. This is the highest level since 2007. It marks a progression of 40 per cent compared to 2013 and confirms the strength of the corporate property market of the Grand Duchy. The 427 million euros invested, the first quarter of 2015 represents nearly 40 per cent of the overall investment realised in 2014. 2014 has confirmed and magnified a shift from 2013 by Luxembourg’s Corporate property market. Between 2008 and 2012, the total amount of annual Investments had stubbornly remained beneath the 500 million euro barrier and the crisis had incited investors to act with prudence. In 2013, the first signs of a solid shift were seen by a very significant progression in the volume of investments (53 per cent up compared with 2012). This result was seen as even more encouraging as it was the fruit of international investors, notably Belgians, French and Germans. In 2014, the recovery was felt in a beautiful way and the volume of Investments reached 1.08 billion euros, displaying an increase of more than 40 per cent compared with 2013. INOWAI took an active part in this result, remaining the number one in the market with more than a 30 per cent share. Several operations were carried out last year, such as the sale of the Kons gallery at AXA Belgium.

A grand renovation

Situated opposite Luxembourg station, this 150 million euro project covers 20,500 square metres, of which 14,600 are offices, 2,400 is Commercial Space and 3,500 is housing. ING will move to this location, its Luxembourg headquarters, at the end of construction in 2016. The AXA buyer was attracted to the project’s unique location and its technical characteristics which will enable him to obtain a ‘very good’ BREEAM sustainability certification level. The renovation project and the extension of the old ING headquarters is equally exemplary for more than one reason. The operation includes an investment of more than 70 million euros. Situated on Route d’Esch, in the heart of the Cloche d’Or district, it has attracted the long term interest of investors and is zoned for full development. To purchase this property, ‘Ethias‘ has associated with two other insurers, the Luxembourg Foyer and the Belgian L’intégrale. After renovation, the property will offer more than 10,000 square metres of office space, providing the latest technological advances and an environmental certification. It will be rented out to the BDO auditing firm for a period of 12 years.

New investors

The investment operations concluded in 2014 showed the interest of investors for the Grand Duchy. As proof, the projects for all the big auditing firms have been carried out or are in the process of completion. In a global economic context which remains uncertain and risky, Luxembourg is a sound investment. Investors which offer arbitration in their real estate portfolios quickly find buyers for their released products. The fluidity of the market is a sign of maturity and good health. At the same time, the flux of new projects bears witness to continuing growth which attracts new arrivals, such as the American firm, Blackstone, REAL I.S. or CNP Assurances. This movement is encouraging as it reflects the economic dynamism of the Grand Duchy. Apart from international Belgian, German, French and American institutional investors, Luxembourg also attracts private investors, notably through the Family Office, which represents 16 per cent of investments carried out. The flourishing economic context comes out in favour of investment. During the first quarter of 2015, four operations were registered and represented a volume of 427 million euros. The main transaction is the selling of the Royal Hamilius, a 36,000 square metre emblematic project comprising shops, offices, and housing. It will be the new front door of the upper city of Luxembourg. Driven by this good start, the amount of investments for 2015 will again exceed one billion euros. The demand for office spaces remains high and the new programmes that are being implemented have been long-awaited. The volume of deliveries should be 110,000 square metres, bringing the stock to over 3.7 million square metres.

Text & Photos: INOWAI