Over the first three quarters of 2018, some €2 billion euros were invested in the Luxembourg property market.
The dynamics in Luxembourg's investment market have remained positive so far this year with 1,436 billion investments for some 36 transactions. These equated to a total investment of around €2 billion.
Likewise, market dynamics have proven very positive in the Grand Duchy. During the first three quarters of the year, 217 transactions were completed on the market - more than in the first three quarters of 2017 (201) and 2016 (179). According to Julien Pillot, Head of Office Agency at INOWAI, "[t]he rented surfaces are on average smaller than for the previous years. The average size of the rented property is 660m2, for a median of 320m2."
On the other hand, there remains a large shortage of property. The vacancy rate, in the third quarter, fell further from 5.14% a year earlier to 3.45%. Apart from Kirchberg (0.2%), this rate was higher in other neighbourhoods of the capital: 1.86% in the city centre, 2.52% at the central station and 5.84% at the Cloche d'Or.
According to INOWAI's predictions, therefore, the market may remain tense in 2019. Despite major players such as Deloitte and Ferrero releasing properties over the next year, this may not be enough to satisfy demand. Julien Pilot commented, "We do not expect the vacancy rate to rise significantly until 2022 and 2023, when other major players will also take possession of their new facilities. [...] That said, in three years, many things can happen. And until then, the trend is extremely positive."
Finally, demand remains strong and supply insufficient despite a steady increase in the stock with a renewed interest in properties located on the periphery, notably Munsbach, Bertrange, Leudelange, Strassen and Belval. This trend is linked to pressure on rents as well a the scarcity of property felt on the territory of the City of Luxembourg. At the airport, the vacancy rate is 2.2%; in Belval, it is 7.8%. According to the INOWAI expert, "[t]he new university district and its surroundings are also enjoying a very positive momentum."