In spite of a slow-down related to the 2008 crisis, office real estate in Luxembourg has been growing nicely since 2013. With record occupation rates, extremely low vacancy rates, rising foreign investment, every system seems to be on "go". What results have we learned from the past year? What is the outlook for the year 2016? Here are a few answers.

A very dynamic market

The upward trend of the business real estate market was still going strong in 2015, after two years of growth. Indeed, the rental market, for example, bounced by 15% over the year, reaching very good results for 2014 within only nine months. Office real estate yields in the Grand Duchy has also remained steady at between 5 and 6%, i.e. among the top European yields. Also, the vacancy rate has remained very low at around 4%. The market has also held strong after significant occupation rates over the course of 2015, but notable deliveries have partially dampened this pressure, keeping the market fluid. On the other hand, 2015 was also an excellent year with regard to investment, with 979 million euros, a 10% increase from 2014. Indeed, only 10 to 15% of surfaces were acquired for immediate occupancy, and 85% of them were already pre-leased.

Special features of 2015

2015 was a record year for office real estate, being "boosted" by very high surface occupation, with seven transactions of more than 10,000 m² in 2015 compared with three in 2014. Indeed, several European institutions, such as the European Commission and the European Investment Bank have signed on, as have several large legal firms. The average surface area has thus passed from 1,000 m² to 1,162 m². The Kirchberg area in particular has benefited from these movements because it represented 41% of total occupations, compared with 24% in 2014. Esch also recorded excellent operations by welcoming the university and thereby representing alone more than a third of these occupations.

2015 also boasted record investments. After 2008, they have surpassed the billion-euro mark for the second time (at 1.26 billion euros). The City of Luxembourg remains the focal point with 45% of total investments. Finally, a new characteristic is the weight of foreign investment growing even further, with more than a quarter made by investors in the Middle East and 20% from the United States.

What is the outlook for 2016?

The year 2016 is set to be a very promising one. The average surface area is sure to decrease while large transactions with European institutions is set to remain exceptional. However, the rise of upcoming deliveries, 130,000 m² compared with 116,000 m² in 2015, should maintain the fluidity of the market without saturating it or increasing the vacancy rate. Specialists highlight that the attraction of the Grand Duchy cannot be denied and it is set apart from a gloomy market in the rest of Europe. Among other things, it relies on an overall growing rate that is clearly higher than the EU average, at around 3 to 4% in 2016. Furthermore, the delivery of large real estate projects, especially in the Kirchberg area, should help to achieve excellent real estate transactions!

After two positive years, the business real estate market in the Grand Duchy has remained stubbornly healthy. Boosted by exceptional operations, 2015 results confirm the attractiveness of Luxembourg both to companies and to investors.

Whether renting or purchasing an office, commercial space or business, you'll find a large selection of business real estate at Good outlook for business real estate in Luxembourg

In spite of a slow-down related to the 2008 crisis, office real estate in Luxembourg has been growing nicely since 2013. With record occupation rates, extremely low vacancy rates, rising foreign investment, every system seems to be on "go". What results have we learned from the past year? What is the outlook for the year 2016? Here are a few answers.

A very dynamic market

The upward trend of the business real estate market was still going strong in 2015, after two years of growth. Indeed, the rental market, for example, bounced by 15% over the year, reaching very good results for 2014 within only nine months. Office real estate yields in the Grand Duchy has also remained steady at between 5 and 6%, i.e. among the top European yields. Also, the vacancy rate has remained very low at around 4%. The market has also held strong after significant occupation rates over the course of 2015, but notable deliveries have partially dampened this pressure, keeping the market fluid. On the other hand, 2015 was also an excellent year with regard to investment, with 979 million euros, a 10% increase from 2014. Indeed, only 10 to 15% of surfaces were acquired for immediate occupancy, and 85% of them were already pre-leased.

Special features of 2015

2015 was a record year for office real estate, being "boosted" by very high surface occupation, with seven transactions of more than 10,000 m² in 2015 compared with three in 2014. Indeed, several European institutions, such as the European Commission and the European Investment Bank have signed on, as have several large legal firms. The average surface area has thus passed from 1,000 m² to 1,162 m². The Kirchberg area in particular has benefited from these movements because it represented 41% of total occupations, compared with 24% in 2014. Esch also recorded excellent operations by welcoming the university and thereby representing alone more than a third of these occupations.

2015 also boasted record investments. After 2008, they have surpassed the billion-euro mark for the second time (at 1.26 billion euros). The City of Luxembourg remains the focal point with 45% of total investments. Finally, a new characteristic is the weight of foreign investment growing even further, with more than a quarter made by investors in the Middle East and 20% from the United States.

What is the outlook for 2016?

The year 2016 is set to be a very promising one. The average surface area is sure to decrease while large transactions with European institutions is set to remain exceptional. However, the rise of upcoming deliveries, 130,000 m² compared with 116,000 m² in 2015, should maintain the fluidity of the market without saturating it or increasing the vacancy rate. Specialists highlight that the attraction of the Grand Duchy cannot be denied and it is set apart from a gloomy market in the rest of Europe. Among other things, it relies on an overall growing rate that is clearly higher than the EU average, at around 3 to 4% in 2016. Furthermore, the delivery of large real estate projects, especially in the Kirchberg area, should help to achieve excellent real estate transactions!

After two positive years, the business real estate market in the Grand Duchy has remained stubbornly healthy. Boosted by exceptional operations, 2015 results confirm the attractiveness of Luxembourg both to companies and to investors.

Whether renting or purchasing an office, commercial space or business, you'll find a large selection of business real estate at http://www.immotop.lu/en/commercial.html