LUXEMBOURG-Luxembourg's office market will offer buying opportunities in 2010 as funds reassess their position, according to realtors. The market, which has seen a steep decline in take-up and a very small number of investment transactions, is set to return next year, with growth forecast at 1.0%.
Luxembourg recorded a 74% decline in office take-up during the first three quarters of 2009 compared to the same period in 2008, and a 71% decrease in investment deals. This resulted in little change in market rents, with the average prime office rent at €456 per square meter per year.
Likewise, due to a lack of market activity, Savills reports a difficulty in quoting investment yields but believes prime yields have moved to 6% so far this year from 5.35% in 2008. Savills Research Head Sheelam Chadha said: "Limited movements in the letting and investment market have profoundly affected the overall sentiment in Luxembourg. However, the underlying fundamentals remain strong despite the short-term imbalances. We forecast some good 'buy' opportunities...for 2010."
During 3Q09, no more than 8,470 square meters was let compared to 28,000 square meters during 3Q08. Vacancy rates rose to 3.5% from 2.05% in 2008, but are set to rise further as an additional 330,000 square meters is delivered to the market into 2010. In investment, €88 million of turnover was transacted in Luxembourg's office market during the first nine months, a 71% fall compared to 2008, and 96% drop compared to the same period in 2007.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.