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Office rents hit record level in Luxembourg city
Luxembourg

Office rents hit record level in Luxembourg city

26.10.2017 From our online archive
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.

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, hannah.brenton@wort.lu, +352 4993 728)