M A R K E T B E AT
LUXEMBOURG Retail Q4 2020 YoY Chg
22,300 sq m 2020 take-up
140 €/sq m/m.
Despite a low Q4 (with only 3,300 sq m of take-up), 2020 performed better than previously expected. Despite a plethora of articles depicted an apocalyptic situation for the retail sector: changes in consumption patterns, an explosion of online shopping, a dramatic drop in footfall in shopping streets and shopping centres, retailers going bankrupt, turnover plummeting, negotiations on rent discounts between tenants and landlords, etc., with around 22,300 sq m of take-up and 56, 2020 is perfectly in line with the previous years (with the exception of the exceptional level observed in 2019).
3.50% High Street Prime Yield Source: Cushman & Wakefield
LUXEMBOURG ECONOMIC INDICATORS Q4 2020 YoY Chg
GDP Growth
6.4% Unemployment rate
0.9% Consumer Price Index (% change) Source: Statec.lu
ECONOMY: Economic rebound expected in 2021 despite further increase in unemployment The GDP growth is projected to fall by 3.5% for 2020 as a result of the COVID-19 outbreak. Domestic demand is expected to decline due to lower private consumption and investment. For 2021, a rebound in GDP growth to 4% is expected, with risks mainly on the downside should the pandemic last longer than expected. Private consumption is forecasted to remain mitigated in 2021 as a result of growing uncertainties and the weakening of the labour market. Unemployment is expected to increase further in 2021 to reach 6.8% compared to 6.4% in 2020. The inflation stands at 0.9% at the end of 2020 and should rise to 1.8% next year.
LETTING MARKET: 2020 performed better than expected
High Street Prime Rent
-3.5%
12-Mo. Forecast
12-Mo. Forecast
Actually, the impact of the health crisis has created a "communicating vessels" effect in household consumption, with less spending in the personal equipment sector and more in household equipment, sports equipment and the food sector. As such, activity was more impacted in the high streets and shopping centres with the successive closures of non-essential shops and footfalls on a huge rollercoaster. Out-ofTown retail is performing better as the presence of essential shops (supermarkets, food stores, but also DIY and garden centres) obviously acted as a catalyst. Recent transactions of Delhaize or Lidl confirmed. But beyond this, it is in reality the format of out-of-town retail which is increasingly appealing to consumers, retailers and developers. Prime rents decreased in the high streets and in the shopping centres this year. They now stand at 140 € (though at 70€ in the avenue de la Gare which suffers from infrastructure works) and 95 €/sq m/month respectively. They remained stable in the out-of-town retail. The trend for the coming months is to a further downside in the high streets to 135€/sq m/month while stability is expected in the shopping centres and out-of-town retail. However, depending on the evolution of the sanitary crisis, the situation could be very different. TAKE-UP (in 000s SQ M, LHS) and # deals (RHS)
INVESTMENTs (MEUR, LHS) AND PRIME YIELDS (%, RHS)
140
160
120
140
7%
300 250
6%
120
100
100
80 60 40
200 5%
80
150
60
100
4%
40
3%
50
20
20 0
0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1
Q2
Q3
Q4
# deals
0
2% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Investments (MEUR)
High Streets
Shopping Centres
Out-of-town retail