MARKETBEAT LUXEMBOURG / Retail Q4 2022

50 MEUR invested in 2022.

No investment transaction was recorded on the Luxembourg retail market during the second part of the year. As in the rest of Europe, Luxembourg is experiencing longer and more difficult transactions, a growing gap between asking and offering prices, and transaction repricing and/or asset withdrawals from sales because offers have not met expected price levels

Further increases of the prime yields expected in 2023.

To counter inflation in the Eurozone, the European Central Bank has delivered two consecutive rate hikes, totalling 125 bps. A new 50bps increase has been decided begin February and further one is scheduled for March. The pressure on European property values is evident Indeed, prime yields, just like the 10-year bond, are rising across Europe, albeit to a lesser extent.

Prime yields remained relatively stable, though on a 25bps rise in the High Streets and Out of Town Retail has been observed, they respectively stand at 4% and 6%. They are expected to increase further in the High Streets segment to reach 4.40% in 2023. In the Shopping Centre segment, they should rise stronger to stand between 6.50% and 6.70% in 2023 though the absence of comparables make any benchmark very difficult. They are also forecasted to increase by 25 to 40 bps in the Out-of-Town Retail segment to reach a maximum of 6 40% in 2023

However, the rise is expected to be only temporary as slight decrease are forecasted as from 2025 though yields will remain above pre-crisis levels in the different market segments