“There is a lack of up to 6,000 homes in Luxembourg”

Share

Twitter Facebook Linkedin Google Mail Print

The largest construction company in Luxembourg, Félix Giorgetti has been involved in some of the most iconic buildings in the nation. Marc Giorgetti, the company’s managing director, tells us about how the Grand Duchy is currently facing a massive demand in one-bedroom apartment units.

What are some of the most noticeable trends on the residential and office building space that you see today?
Luxembourg is gaining between 10,000 and 12,000 inhabitants each year. About 50% of the housing in the City of Luxembourg is occupied by one person; 25% is occupied by two persons; and the remaining 25% is occupied by two and more people. One can see that there is a lack of up to 6,000 homes in Luxembourg. The market provides an additional 3,000 housing units per year; so we have a shortage of about 1,500 to 2,500 housing every year. The government of Luxembourg has a restrictive policy, in the sense that it doesn’t allow us to build one-bedroom housing units, but wants to focus on larger units with two or three bedrooms. As the demand for one-bedroom units is rather high, this creates tension in the market. We are lacking one-bedroom units whereas we have an oversupply of three-bedroom units. The government should adjust building permits to the real market needs. This contributes to making housing very expensive in Luxembourg, and that partly explains why we have so many cross-border workers: there are over 200,000 who drive through the border and brave the traffic every day to come and work in Luxembourg. They spend two hours in their car and this is totally counter-productive, as it creates traffic in addition to many other nuisances.

What is your forecast for the next 5 to 10 years, and what would you advise investors?
Just looking at statistics, we see that the number of people arriving in Luxembourg is growing, so the situation is not getting better. The gap in housing is likely not going to reduce, and most likely the prices will keep growing, or at best remain similar to what we have now. Still compared to Munich, Frankfurt or Cologne, the prices are fairly reasonable, and compared to our neighbour nations, we don’t have many taxes. There is still a high potential. As per the residential market, there is a growing demand from real estate funds who want to invest in the real estate sector. One of the reasons is the low interest rates – and even though with a yield below 4% people are still very interested to buy real estate products. A lot of transactions are being made below a 4% yield.

How will Luxembourg’s new public infrastructure projects, such as the tram, impace the real estate market?
The construction sector will be impacted first. Our government is investing a lot into infrastructure. Many construction companies in Luxembourg are foreign and bring their own staff. Constructions workers in Luxembourg have increased from 12,000 to 18,000 people. So instead of rising construction prices, construction companies have brought to the market foreign labour, which brought a healthy competition and enabled us not to increase the prices. Without this additional labour supply we would have the shortness of labour to develop our own infrastructure projects. At present we are at the maximum limit in terms of labour we can have in Luxembourg to work in construction.

Can you give us a rapid overview of your group today?
Félix Giorgetti is by far the largest construction company in Luxembourg and we are very diversified. We have been involved in numerous projects, including PPPs, we have our own reinsurance company, we are co-creator of the Quilvest Bank, and BIP partners.

What are some of your biggest projects in Luxembourg at present?
Félix Giorgetti is involved in so many projects in Luxembourg. We are involved in the construction of the new stadium. We are planning the construction of a new hotel with 500 bedrooms. In addition to that we are building the headquarters of Ferrero International; we have built the infrastructure for the CFL multimodal terminal; the railway link between France and Luxembourg; the airport cargo center expansion program; the new headquarters of Goodyear; the European Court of Justice, which will be the highest building in Luxembourg.