LEASED: M7 Real Estate leases offices in Centre Orchimont

RealCorp Luxembourg — LEASED: Lease Office — Centre Orchimont, HowaldTransaction brokered by

RealCorp is pleased to announce the leasing of office space to M7 Real Estate Group at Centre Orchimont in Howald.

M7 is a leading specialist in the pan-European, regional, multi-let real estate market. Wholly owned by its senior managers it has over 200 employees in 13 countries across Europe. The team manages over 1,100 retail, office and industrial properties with a value of circa €5.6 billion.

Contact RealCorp for more information on (+352) 26 27 29.

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LEASED: Office & Industrial Property in Contern, Luxembourg

RealCorp Luxembourg — LEASED: Lease Office & Industrial — rue des Chaux, ConternUnder construction 100% pre-let by

RealCorp has recently let the entire Contern Immo property comprising 2,176 sqm of warehouse space and 500 sqm of office space.

The lessees are Global Water Solutions, one of the world’s largest water treatment product manufacturers, and Himalaya Services, a beverage distribution company.

RealCorp had previously sold the land to Contern Immo early in 2017. Construction is underway and the development will be completed in summer 2018.

Contact RealCorp for more information on (+352) 26 27 29

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WestSide Village — New Asset Management Instruction for RealCorp

WestSide Village CapellenPalmer Capital disposes of its Luxembourg buildings (12,000 sqm), D (Daphné), E (Eglantier) and F (Frêne), at WestSide Village in Capellen. RealCorp retains the asset management and confirms its new mandate with the acquiring fund.

The WestSide Village office park, totalling some 24,000 square metres, is conveniently located on the A6 Motorway, junction 2 (Mamer Capellen). This is a mere 15 minute drive from Luxembourg’s city-centre and 20 Km from the Belgian border. It is an ideal location for commuters wishing to avoid peak hour traffic congestion.

Modern and Practical

West Side Village - DaphneThe modern design and practical layout of the building floor areas offer a comfortable work environment to its occupants. The floor space is modular and allows for divisibility from 250 square metres. Ample parking space is available on-site. Both JLL and CBRE have been appointed joint letting agents.

Electrolux and Canon are two of the most recent occupants to take-up space at West Side Village. They join a roster of reputed companies which have elected to base themselves in Capellen.

Further information

For Asset Management enquiries please contact:

Emmanuel Laurent
+352 26 27 29

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RICS Surveyors to use IPMS for Offices in 2016

Luxembourg Kirchberg from the Paffendaller ViaductDid you know? RICS Chartered Surveyors can now apply International Property Measurement Standards (IPMS) in Luxembourg. The BACS (Belgium Luxembourg Association of Chartered Surveyors) code of measuring standards, currently widely used in Luxembourg, will be replaced by IPMS in January 2016.

A laudable aim

We first posted about the proposed universalisation of property measurement standards in July 2014. We acknowledged that the aim of the IPMS Coalition tasked with developing these standards was laudable:

… to produce international standards that will enable different classes of buildings to be measured on a transparent basis … (and to) … promote market efficiency through greater confidence between investors and occupiers by providing consistent property measurements for transactions and valuations.

At that stage, however, we shared with many valuers worldwide some questions about the applicability of an international standard in the local context. It seemed a tall challenge.

RICS Property Measurement incorporates IPMS

Luxembourg Kirchberg, Quartier européen Sud: Alcide De Gasperi Building and Hotel Novotel KirchbergHowever, the recently published RICS Property Measurement guide (May 2015) incorporates the first official version of the International Property Measurement Standards (IPMS) which was published in November 2014.

This first edition of RICS Property Measurement updates the RICS Code of Measuring Practice, 6th ed. It comprises three elements:

  1. Professional Statement: Office Measurement
  2. IPMS: Office Buildings
  3. Code of Measuring Practice, 6th edition

The first two elements apply strictly to office measurements only. The third currently applies to all building classes except offices. It has been effective since 18 May 2015.

The IPMS: Office Buildings document is the first published IPMS standard. It will be updated over time to comply with other IPMS standards, including residential*, industrial and retail, as they are published.

Some parts of RICS Property Measurement are mandatory for RICS members and will be subject to regulation by RICS. Other elements are provided as professional best practice guides and practitioners are strongly advised to follow them.

Implications of the change from BACS to IPMS

The BACS (Belgium Luxembourg Association of Chartered Surveyors) Code of Measuring Standards was first published in 2000. It was not mandatory, but, in the absence of any other standard, has since then had its place in guiding the marketing of Luxembourg offices.

However, the increasing number of cross-border investors will be glad to simplify their assessments by using a single measurement standard. Inevitably, therefore, property owners, as well as agents, architects and developers, will also turn to IPMS.

It appears that this change will initially have only a moderate impact on quoted rents and prices per square metre in Luxembourg, because there is no great difference between current BACS measurements for offices and the new IPMS, at least for standard configurations.

How can RealCorp’s RICS Chartered Surveyors help you?

Contact Michael Chidiac MRICS re Valuation and Advisory or Search and Selection.
Contact Laurent Pedrini MRICS re Acquisitions and Disposals, Landlord Rep., Tenant Rep..

* You can buy digital (£20) or hard copy (£40) versions of RICS Property Measurement from the RICS Shop.
* The IPMS Coalition has identified ‘Residential Buildings” as the next class of property for which to develop IPMS. They ran a public consultation on IPMS for Residential Buildings from 15 June 2015 until 30 September 2015. The consultation is now closed, but it is useful to scan the Consultation Document for a summary of the challenges faced and possible approaches. According to their site, they aim to produce a final standard by the end of 2015.

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The RICS Chartered Surveyors are Coming!

Laurent Pedrini RealCorp LuxembourgCongratulations are due to Laurent Pedrini, our Manager – Corporate Real Estate Services, who has joined the swelling ranks of Royal Institution of Chartered Surveyors (RICS) Chartered Surveyors at RealCorp.

When did you receive the qualification?

I passed the RICS accreditation in Brussels on November 28 and will be allowed to make public use of my MRICS title as from December 15.

How long did it take to study for it?

Well, I followed the Senior Professional path which requires one to hold at least ten years’ experience in Real Estate. So, in a way, I’ve been studying for it for over ten years!

I had to describe my experience with the writing of three case studies of some 5-600 words each which were the basis for an interview. I elected to conduct the interview in English as most of my clients are English-speaking. It took me some three months to write the case studies and their annexes, with the help of my counselor and of Erwan Varron MRICS (Asset Manager, RealCorp) who trained me and provided knowledge of valuation.

3. What does the Senior Professional path entail?

The Senior Professional path focuses on personal experience of Real Estate and how it complies with RICS ethics and business methods.

Logo of the Royal Institution of Chartered Surveyors (RICS)Special attention is brought to the five RICS rules :

  1. Take responsibility
  2. Treat others with respect
  3. Act in a way that promotes trust in the profession
  4. Act with integrity
  5. Always provide a high standard of services to clients
Did you specialize in any aspect?

I passed the RICS “Commercial Practice” which applies mostly to real estate brokerage.

I personally emphasized the necessity to:

  • Improve the image of real estate brokerage in the market
  • Comply with recognized ethics and a respected way of doing business
  • Know valuation methods well to deliver reliable information to clients
  • Show our clients we are structured
  • Show transparency at any stage of our assignment
Are you glad you did it and why?

Of course. RICS membership is a recognition by my peers of my expertise in Real Estate. It also reassures my clients of my dedication to delivering a high standard of services.

RICS at RealCorp Luxembourg

RealCorp’s management team now includes three Chartered Surveyors:

For more information on the value of the RICS standard, see these posts on our blog:

Agency Head now an RICS Chartered Surveyor
Valuing the new RICS Valuer Registration Scheme
Do You Need a Valuation?
The Valuation Process in Luxembourg
Global measurement standard for Luxembourg?

How can RealCorp’s Chartered Surveyors help you?

Contact Michael Chidiac MRICS re Valuation and Advisory or Search and Selection.
Contact Erwan Varron MRICS re Asset Management.
Contact Laurent Pedrini MRICS re Acquisitions and Disposals, Landlord Rep., Tenant Rep..

Post updated 16 June 2015

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New lobby for The Ikano Group

Ikano Reception Furniture SketchRealCorp was honoured in July 2014 with a commission to manage the design and implementation of a new Lobby for the Ikano Group’s head office in Luxembourg.

The Ikano Group – a proud tradition

Originally part of furnishing company IKEA founded in 1943 by Ingvar Kamprad, in 1988 Ikano became an independent group of companies, owned by the Kamprad family. Today the Ikano Group owns, develops and manages financial services, real estate, insurance and retail companies.
Sketch of Ikano Reception FurnitureThe Group currently employs 3560 people. Its reach now extends to 16 countries in Europe and Asia.*

Sketches and Studies

In August and September this year, RealCorp provided the client with several 3D sketches showing proposed layouts of the Lobby area. We also conducted a capacity study in September for the First Floor of the same building.

The First Floor project has been put on standby, but in November the client selected their preferred sketch for the Lobby.

Work in Progress

Ikano IT Office LayoutThis has now enabled us to begin coordinating and supervising various service providers. We have entrusted the work to our reliable collaborators, GSA Livange, Carte Blanche and SSILux Mondorf.

The IT installation will be managed by Ikano’s in-house IT team.

Project management will be done by RealCorp’s own in-house Architect, Monica Bocan. The aim is to deliver the final product on 15 January 2015.


Post updated 16 June 2015

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2RS Insurance move to better offices

New office space for 2RS Insurance LuxembourgImproving your office space doesn’t always involve changing your address (or not much, anyway!). We helped the 2RS Insurance company (Risk and Reinsurance Solutions) to move from the 3rd Floor to the 6th Floor in the Monterey Building at 23 Avenue Monterey, Luxembourg.

Following a referral from Laurent Pedrini of our Agency Team, 2RS Insurance appointed RealCorp Project Management to prepare their spacious new offices.

The destination space was in good condition as it was previously refurbished by the owner. However, some final touches were required. 2RS Insurance needed to create two open-plan offices in the available space. This involved partition walls and open-space technical elements, including electricity.

Tight deadline required speedy responses

We received the confirmation from 2RS on 15 October. They needed to move on 14 November. This tight deadline required emergency scheduling, so we began work as soon as possible on 16 October.

We were pleased to receive speedy reactions from our usual contractors. Security Services Installation Luxembourg (SSILux) and Carte Blanche have already accepted the schedule and will begin work shortly.

Making a good space functional

These pictures were taken during our first inspection of the premises.

2RS Insurance will move into this new space at 23 Avenue Monterey

We have enjoyed assisting with the transformation into an attractive and functional space that meets the client’s needs.

2RS Insurance new premises after move

S Insurance new premises after move

Post updated 16 June 2015

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RealCorp PM Moves East Capital

On 30 Sep 2014, RealCorp Project Management helped client East Capital move from the XXIst century building in Cents to 11 rue St Zithe in Luxembourg.

East Capital OutsideProject Management Services required

Account Manager Aurélie Vanaudenhoven of our Agency team recommended our Project Management services to East Capital when she found the new premises for them. They needed someone to manage works, and to arrange and supervise the move.

We accepted their appointment on 5 August 2014. Our team immediately swung into action to deliver the new accommodation according to their requirements.

A diverse team of experts coordinated by RealCorp PM

The works programme involved:

  • creating a partition wall
  • installing lighting
  • providing an attractive and functional kitchen area
  • installing and checking electrical fittings and connections
  • and purchasing and installing furniture.

We arranged and supervised work by the following contractors: Carte Blanche, Cofeley Solelec, CSlux, Inside, Ambiente and Design F. ISP did the final cleaning and Socotec performed the final regulatory check.

East Capital’s new home now includes an open-plan office for six people, a lobby, an individual office and a meeting room, as well as facilities such as kitchen area and toilets.

East Capital meeting room

East Capital new partitionEast Capital kitchenette

East Capital warm wooden floor

Post updated 16 June 2015

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To Lease or Own Commercial Real Estate?

The commercial real estate industry has been slow to embrace social media. However, many useful articles appear online if you know where to look. One blog post recently discussed at RealCorp is “The Pros and Cons of Leasing vs Owning”, from LeaseMatrix. Our RICS chartered surveyors added comments on whether to lease or own commercial real estate, including observations specific to Luxembourg. We have paraphrased the points here to facilitate reading and commentary. To read them as originally expressed, please visit the original article. Responses from the RealCorp team (RC) are in purple.

To Lease or Own: Advantages of Leasing

These capital buildings are some of the huge number of properties available to lease or own in Luxembourg City.

  • Liquidity & Cash Resources: Leasing often requires less cash than ownership, leaving more capital to invest in core business and expansion. RC: Extra capital could also fund other projects and property investments, yielding returns beyond the firm’s weighted average cost of capital.
  • Financing Source: Leasing may be an attractive source of financing, if the cost of leasing falls below that of ownership. Small or low-profit-margin firms struggling to get traditional financing might find a commercial landlord to lease to them. RC: For comparison, the cost of ownership must integrate the benefit of loan amortisation and capital allowances.
  • Cost Stability & Predictability: The long-term occupancy costs of leasing are often easier to forecast and budget. While some leases expose tenants to minor capital costs, most commercial leases enable tenants to avoid unforeseen items. These include replacement of mechanical systems, structural repairs, and roof or parking lot replacement. RC: In Luxembourg, capex (capital expenditures) are generally landlord’s costs. Landlords cannot recharge these to tenants, but specific lease contracts may contain different conditions.
  • Tax Benefits: The occupancy costs of leasing are fully deductible, which can shield the business’s operating income from income taxes, whereas an owner must depreciate the property’s improvement costs. RC: However, owners can also benefit from a tax shield provided by the deduction of mortgage interest expense.
  • Flexibility & Mobility: A lease’s expiration date gives users a specific date by which to plan and re-evaluate real estate needs. This gives greater flexibility to users who need to expand, contract, or relocate. RC: Yes. This is one of the main reasons that companies prefer leasing to owning.
  • Location: Leasing enables users to occupy space at premier or strategic locations which they could not afford to own. RC: Yes, another good reason for leasing.
  • Focus: Leasing enables tenants to concentrate on primary business without ownership’s property management distractions. RC: This is related to the capex – it’s not just about cost. The party paying must also manage the issues.
To Lease or Own: Disadvantages of Leasing

Luxembourg's beautiful old buildings, such as this Abbey, give a special settled character to the city. There is a wide range of modern as well as period property available to lease or own.

  • Control: Tenants have little control over the types of other tenants that lease space in the building. These other tenants can adversely impact parking, operating hours, use and compatibility, or building services. RC: The lease may also contain restrictive use covenants, such as premises to be used as an Office only, or a limit on the the lease term.
  • Cost: For an established business with easy access to capital, leasing could be a more expensive alternative to ownership. RC: It also depends on the strategy. Some major companies have even found that acquisition followed by a sale and lease-back created better value.
  • No Appreciation or Equity Accumulation: Leasing offers no opportunity to profit from property appreciation, or for equity accumulation by reducing the property’s underlying financing. RC: One must keep in mind that this reasoning does not hold in declining markets with falling capital values. Then, lease may be a better option until the market rebounds. Deciding “to lease or own?” depends on economic context.
  • Contractual Obligations: If a leased property becomes less desirable or unsuitable, or the tenant’s business becomes unprofitable, the tenant must still pay rent or face penalties for default. RC: In our experience, this is seldom a problem. Why? a.) Landlords are usually willing to refurbish properties to avoid losing rental income, unless market conditions change substantially.  b.) The tenant may sublet or assign the lease.
  • Loss of Salvage Value: Most leases stipulate that certain improvements by the tenant become the landlord’s property at lease end. Alternatively, the landlord may require the tenant to remove improvements made at the tenant’s
 expense. RC: If equipment “touches and concerns” the demised premises, e.g. is a fixture, the landlord may own it at lease end. Reinstatement and improvements clauses define whether amenities belong to tenant or landlord.
To Lease or Own: Advantages of Owning

Luxembourg Architecture

  • Appreciation: Owners can benefit from asset value appreciation, whereas tenants cannot. RC: Keep in mind that property can depreciate as well.
  • Debt Reduction: Under an amortizing loan, an owner accumulates equity in the property as mortgage principal is paid down. RC: Correct unless property values fall.
  • Control: Property ownership enables direct decision-making and control, whereas leasing does not. RC: Yes, in theory. But tenants often have greater control in single-tenanted buildings, especially regarding building management and appointing service contractors.
  • Income: If a portion of the property is leased, the rental stream from tenants can help pay the mortgage, or be reinvested or distributed. RC: It might be strategic to “save” a part of the revenue to set up a sinking fund for capital expenditures or debt repayment.
  • Tax Advantages: Ownership enjoys interest and depreciation deductions that shelter income from taxes. Also, on sale of the property, the gains tax is usually at a lower marginal tax rate than ordinary income. For example, in the USA, the capital gains tax rate is currently 20% and depreciation recapture is 25%. RC: Another example: In Luxembourg, the buyer pays registration duties at either 7% or 10% of the property purchase price. However, often a “share deal” transacts the SPV (Special Purpose Vehicle) holding the property via the sale of its shares. This sale of shares does not attract registration duties as an “asset deal” would. This tax saving is beneficial to both seller and buyer.
To Lease or Own: Disadvantages of Owning

Luxembourg medieval buildings

  • Time Frame: Transactional costs of acquisition and disposition can offset or eliminate the benefits of appreciation over a short-term hold. RC: Save for a general property market downturn, transaction costs do not preclude achieving adequate net returns. Careful initial analysis and planning should determine whether to lease or own.
  • Inflexibility: When a business (or a related party) owns a property, relocating for business purposes may be difficult. The property must be relet or sold, which can take months or years. RC: This is why any acquisition must be thought through, considering exit scenarios such as letting the property or outright disposal.
  • Capital Requirements: Commercial property usually requires a down payment of 20 to 30%. This consumes capital which could otherwise be invested in a user’s business. RC: Unless cash is needed immediately, the business could invest in projects such as property acquisitions that yield more than the firm’s weighted average cost of capital.
  • Management: Commercial property management issues are complex and can be distracting and costly. They cover areas such as legal compliance, health and safety, and contractor management. RC: Most landlords appoint asset and property managers to manage buildings, freeing themselves to focus on other business. However, buying time costs money.
  • Financing: Sources and availability of debt may be limited during economic recession or depression. Rising interest rates may make refinancing difficult or impossible. RC: The wave of recent non-performing loans has shown that the higher the leverage, the more vulnerable the property is to market downturns.
  • Debt Covenants & Restrictions: Most commercial property loans require personal or corporate guarantees, with a liquidity requirement. (E.g. a minimum deposit balance with the lender). Alternatively, non-recourse fixed-rate financing may come with other stipulations, such as yield maintenance or a break-up fee, should the loan be retired early. RC: Agreed. Some debt covenants often found in loan agreements are the Interests Cover Ratio and the Loan to Value Ratio.
  • Downside Risks: As with every investment, ownership carries numerous risks. These include decline in property value due to the economy or market, financing risks, and unanticipated repair and maintenance expenditures. RC: Banks and shareholders require property valuations to update market value for lending and accounting purposes. External chartered valuation surveyors undertake these valuations at least once a year.

To contribute your thoughts on whether to lease or own commercial real estate, please Leave a Reply below.

To Lease or Own: How can RealCorp help you?

In conclusion, there are good reasons to consider either Leasing or Owning. Your specific circumstances will likely point clearly in one direction or the other, if you’ve done your analysis homework! However, this type of analysis is complex and may be time-consuming. RealCorp has the expertise to help.

Contact Michael Chidiac MRICS, Managing Director, now, to talk through your options:


Post updated 16 June 2015.

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West Side Village HVAC Refurbishment

Thermic camera check at West Side VillageOn Saturday 13 September, after a final thermic camera check, RealCorp Project Management completed another successful delivery, This project, in West Side Village, Capellen, Luxembourg, involved the complete refurbishment of the HVAC cooling and heating system.

HVAC refurbishment sorely needed

Due to the poor installation of connecting elements in 2006, the existing system had been rusting and struggling to cope. As evidence of the decay emerged, it became clear that significant intervention to prevent water incidents would be required at some point.

On the advice of RealCorp’s Asset Management team, the owner wisely decided to take action now to prevent further deterioration.

West Side Village rusted cable

Many metres of cabling; many hours of work!

Working with contractor Martin Weber of Trier, and RealCorp’s Christophe Daudigny as Project Manager, we removed and replaced 7 670 metres of cabling.

This HVAC refurbishment was a challenging project, not only due to its scale, but also because West Side Village is an occupied site.

Most of the buildings are rented to other companies (Creatrust, Sopra, WSR, Nizi). These tenants needed to continue their daily business with as little disruption as possible.

This required 17 night operations during the 890 hours worked on site over four months (May to August 2014).

HVAC refurbishment benefits tenants and landlord

We are pleased to report that we achieved the refurbishment goal and also enabled these tenants to continue working. They will now enjoy a workplace free of unexpected water problems.

The owner is happy too, because a major factor affecting the current and future value of the asset has been addressed.

West Side Village cables in ceilings

Post updated 16 June 2015

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