Office rents hit record level in Luxembourg city
Prime office rents in Luxembourg's city centre hit a record level in the third quarter, a report from real estate agency Cushman & Wakefield found.
Growing competition for space pushed prime rents up to €50 per square metre a month in the central business district - the area around the old city - an increase of 11.1% year on year.
"Activity is expected to remain robust as Luxembourg economy posts strong performances and benefits from the Brexit [vote]," the report stated.
The amount of available office space across the city dropped below 4%, among the lowest level in Europe, and the central business district only had 1% available space.
A further slight uptick in prime rents is expected in 2019 amid little sign of speculative development and growing interest in London-headquartered companies relocating to the Grand-Duchy as a result of Britain's vote to leave the European Union.
Office rents in the Luxembourg's station area increased slightly to €36 per sqm a month, while in Kirchberg rents were flat at €35 per sqm a month.
Take-up of office space was slightly down in the third quarter following a strong start to the year. However, total take-up in 2017 is expected to overtake the amount reached in 2016.
More than €500m was invested in Luxembourg real estate in the third quarter, mainly in office buildings, including German insurer Allianz's €178m purchase of the Vertigo complex in Cloche d'Or.
Prime yields stood at 4.3%, which could be further compressed amid competition for prime buildings, and the "growing importance of Luxembourg in the post-Brexit context", the Cushman report said.
(By Hannah Brenton, email@example.com, +352 4993 728)