M A R K E T B E AT
LUXEMBOURG Retail Q3 2020 YoY Chg
19,050 sq m H1 2020 take-up
140 €/sq m/m. High Street Prime Rent
High Street Prime Yield Source: Cushman & Wakefield
LUXEMBOURG ECONOMIC INDICATORS Q2 2020 YoY Chg
GDP Growth
6.5% Unemployment rate
0.18% Consumer Price Index (% change) Source: Oxford Economics
ECONOMY: Rebound expected in 2021 The GDP growth is projected to fall by 3.7% for the year 2020 (revised from a sharp 6.2%), as a result of the COVID-19 outbreak. Domestic demand is expected to decline due to lower private consumption and investment, while government consumption is set to cushion only part of the fall in 2020. The fall is sharp but might seem modest compared to results reported elsewhere in the euro area. For 2021, a rebound in GDP growth to 5.4% is expected, with risks mainly on the downside should the pandemic last longer than expected. Private consumption is expected to further decline in 2020 due to the effects of the pandemic and due to the weakening of the labour market (via a higher unemployment level and lower employment growth). Unemployment is expected to increase to 6.5% for 2020 (coming from 5.6% in 2019) and 6.2% in 2021.
LETTING MARKET: Strong Q3 despite COVID-19 crisis
3.50%
-3.7%
12-Mo. Forecast
12-Mo. Forecast
More than 10,000 sq m of take-up were recorded in Q3 2020 despite the COVID-19 crisis, it’s 20% more than the activity observed the first part of the year. Year-to-date, more than 19,050 sq m of take-up and 45 deals are registered, a level perfectly in line with the 5-years average (the exceptional 2019 excepted). Main streets and shopping centres suffer more than the out-of-town retail though encouraging signs are currently observed with footfalls on a continuous upward since the end of the lockdown. However, they are still below last year levels and important disparities exist between cities and/or shopping centres. Fashion sector is more impacted than the others. Actually, we observe a rise in the sports & leisure segment as well as in the food sector as the transactions of Delhaize, Lidl and other Food & Beverage retailers confirm this quarter. Despite this activity, new corrections of the prime rents have been observed in the high streets and in the shopping centres this quarter. 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 slight increase in the coming months to stand again at 150€/sq m/month in the high streets before the end of the year 2021. However, depending on the evolution of the sanitary crisis, the situation could be very different. TAKE-UP (in 000s SQ M)
PRIME RENTS BY SECTOR (€ / SQ M / MONTH)
140
160
120
140
250
200 120
100
100 80
150
80 60 60 40
100
40 50
20
20
0
0
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1
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Q3
Q4
# deals Main Street
Out of Town
Shopping centre