Brexit boosts Luxembourg's real estate prospects
Luxembourg has been ranked in the top 10 cities in Europe for real estate investment and development in 2018, amid expectations it will benefit from Britain's departure from the EU.
The city for the first time entered the ranks of the most attractive cities in Europe, claiming ninth spot in an annual real estate forecast published jointly by the Urban Land Institute and PwC.
Brexit underpinned Luxembourg's place in the rankings, according to the report, which is based on a survey of 800 real estate professionals in Europe.
“We see Luxembourg as a very attractive alternative for London. You can already see increasing construction activity there since the Brexit vote,” a Swiss investor said in the survey.
The city's strong financial sector, its growing economy and major investments in industrial sites, data centres and logistics were all cited as positives.
However, the report said the city is expensive to live in and there are concerns around infrastructure capacity due to a lack of residential, retail and schools planned to accommodate an influx of new businesses.
Real estate investors also find it "hard to place capital" into Luxembourg and yields are low for a small market.
Yields for the best office buildings in prime districts like Kirchberg and Cloche d'Or stand at 4.35%, while in secondary locations in the suburbs yields are between 5% - 6.75%.
The Grand-Duchy's capital was also ranked fourth overall for an expected increase in rents and capital values in 2018.
London, on the other hand, was expected to see a fall in values on both counts and was ranked 27th overall.
“There is not a lot of tangible evidence of Brexit’s impact on the markets we play in – except in Luxembourg,” said the head of real estate at a European insurance group.
German cities remained at the top of the list, with Berlin claiming top spot for the fourth year in a row. Frankfurt and Copenhagen were tied for second.
Munich, Madrid, Hamburg, Dublin and Stockholm were all ranked above Luxembourg, while Amsterdam came in just below in the tenth spot.
(Hannah Brenton, email@example.com, +352 4993 728)