2015 is proving to be an excellent year for office real estate in Luxembourg; the figures from the first three quarters exceeds that of all the year 2014 both in terms of investment as well as rentals.
With 139,112 m² leased in Q3, the rental market has literally soared, bringing the total for the first nine months of this year to 223,502 m², which is more than the entire year 2014, which had totaled 205,941 m². This should be put into perspective by stating that this result can be explained in particular by the installation of the university of Luxembourg in Esch-Belval. The Maison des Sciences Humaines (Humanities) accounts for 26,500 m², the Maison du Savoir for 20,000 m², another 19,400 m² for the Maison du Nombre and that for Innovation being 13,700 m2. Thus, excluding these 79,600m², the quarterly take-up would be 59,512 m2 for a total of 143.902 m² since the beginning of the year.
Apart from the transactions related to the University, several other major real estate transactions were recorded across Luxembourg in the last three months. Arendt & Medernach just moved into its new office building (16,700 m²). The European Investment Bank (EIB) continues to develop and is taking possession of 10,768 m² additional office space in Kirchberg.
During Q3, 63 transactions were concluded in total, which is slightly less than for the same period of the previous year. Since the beginning of the year, 186 office spaces saw them being occupied for the first time. Given the very large transactions recorded, the average area has crossed the threshold of 1,000 m² to 1,162 m². The median area in turn, is 250 m².
The installation of the university in Esch-Belval explains that this area accounts for over one third of new occupancies (36%) this year, before Kirchberg (20%), the Cloche d'Or (12%) and downtown in Luxembourg city (8%). The activity analysis shows the "education and social" sector (36%) ahead of the European institutions (18%), Finance and Banking (15%) and law firms (10%).
In this context, the vacancy rate remains very low at 4.3%, the lowest level since 2009. This average rate hides disparities since it goes down to 1.58% and 3.28% in Kirchberg and Luxembourg centre, the average over the city of Luxembourg amounting to 3.14%.
Investments: the €1 billion crossed again
Driven by favourable economic conditions, the investment market is very dynamic. In 2014, it had again surpassed the €1 billion for the first time since the crisis of 2008. This year, this symbolic threshold has been exceeded in only nine months. The amount of transactions concluded amounted to €1.2 billion for 23 operations during this period.
The centre of Luxembourg city totals 45% of the assigned office real estate areas. It leads the area of Cloche d'Or with 13% of transactions, the airport (12%) and Kirchberg (6%). This result confirms the growing dominance of linking the airport to the Cloche d'Or through the Kirchberg city centre and train station.
These very good results are seen in an enabling environment. Statec has published a growth rate of the Luxembourg economy between 3.5% and 4% for this year. For 2016, it expects an increase of GDP above 3%.
Provided by Inowai
