Advise Transact Manage MARKET REPORT H1-2013 REAL WORDS

« New look, new business, new opportunities... »

Luxembourg is a great place to be in business right now. Throughout the credit crunch, this small country at the heart of Europe has continued energetically and efficiently to provide property, services and investment opportunities to international investors.

Whether you have already invested or considered investing in Luxem- bourg, or don’t know it at all, this first issue of RealCorp’s re-branded, more in-depth, Quarterly Report offers a useful up-to-date overview of this thriving market.

To inspire you, we begin with a summary of the advantages of Luxem- bourg’s location and economy and verifiable facts about the growth of the real estate market and financial industry.

To orient you, we provide an overview of the names and locations of different commercial areas and related industries.

To equip you, we then offer a detailed description of market facts for each sector, including total stock, Vacancy Rate, availability, take-up, deliveries, accessibility, facilities, and tenancy profile. There is also a Glossary of commercial real estate terminology used in Luxembourg.

This fact-filled summary will pique the interest of most investors. To take it further, talk to us!

Michael Chidiac, Managing Director RealCorp

I. LUXEMBOURG IN FACTS...... 3 I.1. Key figures...... 3 I.2. market...... 4 I.3. Focus on the map...... 5 I.3.1. Key Facts...... 5 I.3.2. Market Structure...... 6 I.4. Market focus per sector...... 7 I.4.1. Luxembourg-City...... 8 I.4.2. Decentralized-West...... 15 I.4.3. Decentralized-South...... 19 I.4.4. Decentralized-East...... 21 I.4.5. Decentralized-North...... 24 I.4.6. Esch-Belval...... 25 II. GLOSSARY...... 26

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 2 I. LUXEMBOURG I.1. KEY FIGURES IN FACTS

In spite of the global financial GROWTH RATES OF GDP IN VOLUME (based on seasonally adjusted data) turmoil throughout Europe and its 2.5 effect on the financial industry, Luxembourg still shows steady 2 economic stability. 1.5 The economy of the country is largely open to the global eco- 1 2012 Q3 nomy with 85% of its production 0.5 exported, making Luxembourg 2012 Q4 a champion in this category! 0 2013 Q1 2013 Q2 -0.5 Luxembourg, located at the heart EA17 EU27 EU28 Luxembourg of Europe, is part of the largest -1 trading area in the world, the -1.5 European Union. From here, it plays a role globally (holding the -2 second place in the Invest- Source: ec.europa.eu/eurostat ment Fund industry) and locally (as the engine of the “Greater Re- gion”, (including South Belgium, KEY FIGURES North-East France and South-West Total Population (07/2013) 537’039 Germany). Luxembourg-City 103’600 Beside its key location, the country Esch-sur-Alzette 31’900 enjoys some of the best transport, Domestic wage-earners (07/2013) 361’668 logistics and telecom infrastru- Cross-border commuters (07/2013) 159’895 tures money can buy, a highly of which from (2012) France: 77’800 skilled and multilingual workforce, a Belgium: 39’500 stable political and social climate, Germany: 39’600 an attractive legal and fiscal environment, as well as one of the Unemployment rate (07/2013) 7.0% highest standards of living in the Inflation rate (07/2013) 1.8% world. All these elements make Growth rate 2013 1.0% Luxembourg a choice location for doing business. Growth rate forecast 2014 2.3% Source: statistiques.public.lu This thriving activity has a direct impact on the Real Estate mar- ket, which has been experiencing FINANCIAL BUSINESS IN LUXEMBOURG steady growth over the last two de- Banks cades. Luxembourg has naturally and rapidly become an attractive Number of banks (08/2013) 143 land of opportunities for real estate Employees (08/2013) 26’382 investors and developers. Luxembourgers 6’211 Foreigners (resident / non-resident) 20’165 Countries of origin 26 « This thriving Investment funds Number of UCIs (08/2013) 3884 activity has a Net assets (08/2013) bn€ 2’523 PSF direct impact on Employees (06/2013) 14730 the Real Estate Insurance and Re-insurance Number of insurances (01/2013) 94 market » Number of re-insurances (09/2012) 243 Source: abbl.lu

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 3 I.2. LUXEMBOURGISH MARKET

In comparison with 2012, the Total Office Stock has increased by almost 2% to approach 3,5 million sqm.

The market expects to reach this figure with some major deliveries still scheduled for the end of this year or early 2014 at the latest (e.g. Aurora or Charlotte, both pre-let in CBD, the new Raiffeisen Bank HQ in Leudelange, etc.).

The most significant office deliveries during the past semester to- tal some 25,377sqm (Central Plaza, Southlane I in Esch-Belval, W22 in Windhof and the first phase of the Office Park Potaschbierg between the Airport and the German border).

2013 will see a Vacancy Rate finally dropping under the psycholo- gical threshold of 6%, in line with the figures reported during the best years of the market.

However, if we break it down by sector, we notice significant diffe- rences between the City of Luxembourg and Periphery, where the Vacancy Rate can reach up to 28%.

Yet that seemingly high Vacancy Rate concerns sectors that contain only a minor portion of the Total Office Stock. Indeed, the City of Luxembourg alone represents about 78% of this stock while running a Vacancy Rate of only 3,8%!

At the middle of the year, the Take-up of 68,000sqm was in line with expectations for this time of the year. It traditionally gains momentum in the course of the second semester.

Take-up has been boosted by both the Financial sector (KPMG with 3,750sqm in Bertrange) and the Public sector (i.e Université de Luxem- bourg in Esch-Belval with 4,970sqm, the State Services with 4,417sqm and the EU Translation department with 5,130sqm in Gasperich).

The average Take-up office size is 500sqm while three-quarters of the demand does not exceed this figure.

Tenant demand is still high for small to mid-sized office space while availability is reducing for most sectors. This particularly applies for CBD and Kirchberg which are still the most sought-after locations.

Prime rents are still recorded for the CBD where good quality of- fice spaces are scarce, both for small and large offices, reaching 42 euros/sqm/month.

« The City of Luxembourg represents alone about 78% of this stock while showing a Vacancy Rate of 3,8%! »

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 4 I.3. FOCUS ON THE MAP

AACHEN

Bastogne

WILTZ

DIEKIRCH NORTH

ECHTERNACH REDANGE FRANKFURT MERSCH E44

Arlon GREVENMACHER LIEGE - MAASTRICHT NAMUR - BRUXELLES LUXEMBOURG E25 EAST

METZ Pétange WEST NANCY REMICH PARIS

Longwy SOUTH

E29 ESCH / Schengen STRASBOURG

BELVAL SAAREBRÜCKEN E25

THIONVILLE METZ I.3.1. KEY FACTS

Luxembourg covers 2,586 km2 and is home to some 229,900 inhabitants (January 2013).

The most populated cities are Luxembourg (99,900), Esch-sur-Al- zette (30,900) and Differdange (22,300).

The country is divided into three administrative districts Luxembourg, Diekirch and Grevenmacher.

Commercial activities are mainly concentrated in the South of the country where Luxembourg and its periphery represent by far most of the office market. Esch-Belval stands as an alternative to the capital with its ambitious and fast developing projects (Belval).

Both cities enjoy outstanding railroads and motorway connections to neighbouring countries.

While the City of Luxembourg is the traditional home of the financial industry, Esch benefits from its key location, modern and extensive logistic facilities, and its proximity to the French market.

More than two thirds of the Total Office Stock is concentrated in the City of Luxembourg. The rest is distributed amongst interconnec- ted office or mixed activities areas stretching across the country along- side the motorway connecting Belgium and Germany.

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 5 I.3. FOCUS ON THE MAP

I.3.2. MARKET STRUCTURE

For ease of understanding and an optimal reading of the market, we have grouped the market into sectors as follows :

1. CITY OF LUXEMBOURG (COMMUNE DE LUXEMBOURG) The territory of the capital divided itself into 7 sub-sectors.

2. DECENTRALIZED Office & activity sectors surrounding or giving easy access to the City of Luxembourg.

3. PERIPHERY I North Most attractive activity zones are situated along- side the Belgian border (Wiltz for Belgium, Echternach or Diekirch for Germany) or in the central cities (Mersch and Ettelbrück). The activity is mostly industrial (GoodYear, Luxlait), with some large shopping centers (Pommerloch, Mersch).

I South Activity is concentrated around Bettembourg and Dudelange, which are particularly attractive for small and midsized companies active in industry and haulage. The area is home to an extensive logistics centre (EurohubSud), currently in development and already accommodating big Logistics players (e.g. CFL Multimodal and Transalliance).

I West This area is attractive thanks to its proximity to the Belgian and French borders and respective markets; it is essentially composed of industry and commercial zoning, accommodating small to mid-sized man craft and manufacturers (e.g. Tontarelli, Delphi Automative, Offergeld Lo- gistics, etc.).

I East Attractive for small and mid-sized businesses relocating from Ger- many.

4. ESCH / BELVAL: Comprises the city of Esch-sur-Alzette and its surroun- dings (Ehlerange, Sommet, etc.) and especially the new of- fice quarter of Belval where RBC Dexia has its seat and to which many governmental bodies are relocating (e.g. Library, University, etc.).

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 6 I.4. MARKET FOCUS PER SECTOR

H1 Total Office Stock Vacancy rate (30/06/2013) 14 14.00 %

12% 12.00

10% 10.00

City 8% 8.00 Vacancy rate Decentralized 6% 6.00 (30/06/2013) Esch-­‐Belval 4% 4.00

2% 2.00

- -­‐ City Decentralized Esch-­‐Belval

H1 Take-­‐up H1 Deliveries

City City

Decentralized Decentralized

Esch-­‐Belval Esch-­‐Belval

WALFERDANGE/MERSCH/ MARKET MAPPING COLMAR BERG/ETTELBRUCK/WILTZ

ETTELBRUCK (LU)

WINDHOF

ARLON - BRUXELLES (BE) WALFERDANGE A7

TRIER - KÖLN (DE)

CAPPELEN

WINDHOF/MAMER MUNSBACH E44-A1 WINDHOF/KLEINBETTINGEN LIMPERSTBERG/ E25-A6 CITY NORTH KIRCHBERG SENNINGERBERG CENTS HAMM/ MAMER Route d’Arlon SANDWEILER CONTERN/ MUNSBACH/TRIER

STRASSEN CBD NEUDORF/ HAMM MERL/ BERTRANGE BELAIR SANDWEILER STATION BOURBON Route de Longwy PORTE DE HOLLERICH

CESSANGE

HOLLERICH/LEUDELANGE/DIPPACH/ Route de Thionville HOWALD SCHOUWEILER/BACSHARAGE CONTERN GASPERICH/ CITY SOUTH HESPERANGE

LEUDELANGE E25-A3 nLuxembourg

A4 nDecentralized

ESCH-SUR-ALZETTE (LU) METZ - PARIS (FR)

DUDELANGE BURANGE/ THIONVILLE/ METZ/NANCY

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 7 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

CBD

A FEW KEY FACTS Total Office Stock 800'000sqm Vacancy Rate 3.0% Availability 24'000sqm Take-up 14'311sqm Deliveries 3’685sqm

MORE SECTOR FACTS I Accessibility Mid-way between Luxembourg, Germany and France, the city is conveniently located and well-served by motorway and rail connec- tions. The most sought-after areas are Boulevard Royal, Avenue de la Liber- té, Avenue Monterey, Grand-rue, Boulevard de la Foire, Rue Joseph II, Boulevard Grande-Duchesse Charlotte. The area benefits from several large public car parking facilities.

I Facilities The sector is well-served, with a vast choice of restaurants, high- street retailers, museums and cultural venues, and green parks. The hyper-centre (around the Place d’Armes and the Grand-rue) sup- ports most commercial activities while the Boulevard Royal houses the largest office properties.

I Tenancy profile The sector mainly hosts Private Banking, fiduciaries, small and mid sized legal companies, and fund management firms. It is also home to most governmental institutions (i.e Parliament, Judiciary, etc.). The area has been particularly attractive for Chinese banks.

I Expected delivery for the coming six months Le Charlotte: 4’817sqm

I New deliveries for the period Royal 1 (complete renovation): 3’685sqm

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 8 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

KIRCHBERG

A FEW KEY FACTS Total Office Stock 920'000sqm Vacancy Rate 2.0% Availability 18'400sqm Take-up 12'123sqm Deliveries /

MORE SECTOR FACTS I Accessibility Kirchberg is the second sector in terms of office stock after the CBD. It’s the Eastern gate of the city. Thanks to its pre-planned infrastruc- tures, the sector benefits from effective road access and regular and quick connection to the CBD and the Station via Limpertsberg. The main roads of the sector are Avenue Kennedy, Rue Jean Monnet and Edward Steichen.

I Facilities The upper part of the Kirchberg (Kiem and Grünewald) benefit from extensive retail and restaurant facilities thanks to the Utopolis cine- ma complex and the Auchan shopping mall. The latest office buil- dings are bound to a commodate even more retail activities on their ground floors. The lower part of the Kirchberg concentrates retail ac- tivities in the K2 buildings site, while the entrance of the zone (Portes du Kirchberg) accommodates the Philharmonic Centre.

I Tenancy profile In upper Kirchberg (Kiem and Grünewald), most tenants are banks and financial institutions (BGL BNP Paribas, ABN Amro, Danske Bank, State Street, etc.), while the lower part mostly accommodates EU ins- titutions (Parliament, Commission, European Court of Justice, Euro- pean Court of Account, etc.). The middle part (Parc) hosts most of the German banks and the new built-to-suit developments (KPMG, Arend & Medernach, The Public Library). Kirchberg is also home to the largest legal office in the country (Arend, Allen & Overy).

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 9 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

LIMPERTSBERG / CITY NORTH

A FEW KEY FACTS Total Office Stock 82'000sqm Vacancy Rate 1.2% Availability 984sqm Take-up 1'390sqm Deliveries /

MORE SECTOR FACTS I Accessibility The sector includes the whole north of the city where Limpertsberg hosts most of the office activity, at the crossroads between the CBD and Kirchberg. The area benefits from extensive public car parking (Place des Glacis) and regular bus connections with the Station and the city centre. The main roads are Allée Scheffer, Avenue Paster, Avenue de la Faiencerie and Boulevard de la Foire.

I Facilities The sector benefits from a good range of restaurants and shops, schools and kindergarten facilities.

I Tenancy profile Although principally a residential area, office buildings are found along the Place des Glacis which is home to the headquarters of KPMG Luxembourg, Caseis, University of Luxembourg and many Embassies.

I Expected delivery for the coming six months City Link: 3’885sqm

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 10 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

MERL / BELAIR

A FEW KEY FACTS Total Office Stock 69'000sqm Vacancy Rate 8.0% Availability 5'520sqm Take-up 1'436sqm Deliveries /

MORE SECTOR FACTS I Accessibility The sector is mainly a high-standard residential area composed of art deco and mansion houses. Most of the offices are concen- trated alongside the Route de Longwy. Merl-Belair enjoys very good accessibility by car via the Rue de Bouillon or the . Main popular locations are Route de Longwy, Rue Gaston Diderich, Rue de Bragance.

I Facilities The sector enjoys high quality restaurants and cultural venues (e.g. music conservatory) and numerous kindergartens.

I Tenancy profile Typical tenants for the sector are workers in the liberal professions (architects, lawyers,etc.), schools and university facilities.

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 11 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

GASPERICH / CLOCHE D’OR / CESSANGE / BAN

A FEW KEY FACTS Total Office Stock 365'000sqm Vacancy Rate 8.0% Availability 29'200sqm Take-up 8'631sqm Deliveries /

MORE SECTOR FACTS I Accessibility The sector includes Cloche d’Or, Ban de Gasperich, Cessange and Porte de Luxembourg. Located south of the City alongside the A1 motorway, it is easily accessible by French and Belgian commuters. The area is experiencing a major upgrade with the development of the Ban de Gasperich, where the new headquarters of Pricewaterhou- seCoopers is under construction. The main access roads are the Route d’Esch and the future Rue Raiffeisen.

I Facilities Kirchberg offers extensive retail spaces and a wide range of restau- rants.

I Tenancy profile Cloche d’Or is home to most of the big names of the sector. The Drosbach office property continues to attract the services of EU Commission and Translation centres, while the recently developed office property Vertigo is now home to the Bank of New York. Besides PricewaterhouseCoopers, the largest employers in the area, ING and Banque Degroof, have their seats in Gasperich.

I Expected delivery for the coming six months Banque Degroof (extension): 2’361sqm

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 12 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

STATION / BOURBON

A FEW KEY FACTS Total Office Stock 380'000sqm Vacancy Rate 3.3% Availability 12'650sqm Take-up 1'937sqm Deliveries 12'777sqm

MORE SECTOR FACTS I Accessibility This sector, including Bonnevoie, Station and Fort Bourbon, is well-served by public transport. The Central Station and the nearby bus terminal ensure a fast, comfortable and easy connection for vi- sitors and commuters. Car access is also simple due to large public parking garages. The most active areas are Avenue de la Liberté, Avenue de la Gare, Rue de Hollerich, Place de la Gare, Place de Paris.

I Facilities There is a large variety of restaurants, retailers (on Avenue de la Gare, in Plaza Liberty, in Central Plaza, etc.) and hotels (e.g. Mercure, Sofitel City). The Station area will undergo extensive renovation in coming years and most of the infrastructure will be modernised.

I Tenancy profile The sector is home to the headquarters of the steelmaker Arcelor Mittal and is also the traditional location of high-street Luxembourg banks (e.g. BCEE). Modern developments over the last year have in- creased the office stock base and diversified the offering, attracting large financial institutions (e.g. HSBC, BBH, Citco, Raiffeisen, ING, Société Générale etc.).

I Expected delivery for the coming six months Plaza Liberty: 3’500sqm City Station: 3’360sqm

I New deliveries for the period Central Plaza: 12’777sqm

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 13 I.4. MARKET FOCUS PER SECTOR

I.4.1. LUXEMBOURG-CITY

HAMM / NEUDORF / KALCHESBRUCK

A FEW KEY FACTS Total Office Stock 78'000sqm Vacancy Rate 15.1% Availability 11'786sqm Take-up / Deliveries /

MORE SECTOR FACTS I Accessibility The sector includes Hamm, Cents, Neudorf and Kalchesbruck located in East of the City, close to the Airport. Hamm is a mixed area (office and semi-industrial zone) while Kalchesbruck hosts larger and more recent office properties (e.g. Deloitte and Nordea). The area is convenient for German commuters or tenants expecting moderate rental prices with extensive parking facilities while located in the city of Luxembourg. Main roads are Rue de Neudorf or Rue de Bitbourg.

I Facilities High ratio of car parking while still in the commune of Luxembourg.

I Tenancy profile Hamm mainly accommodates small industries, storage facilities next to the Police building and some services of the EIB. It is worth noticing that recently renovated properties give small and mid-sized tenants access to the area (e.g. the former headquarters of Fujitsu at 20 rue des Peupliers) along with small storage facilities.

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 14 I.4. MARKET FOCUS PER SECTOR

I.4.2. DECENTRALIZED - WEST

STRASSEN

A FEW KEY FACTS Total Office Stock 83'250sqm Vacancy Rate 5.4% Availability 4'496sqm Take-up 366sqm Deliveries /

MORE SECTOR FACTS I Accessibility Strassen benefits from a location between the Western gate of the- City of Luxembourg (Place de l’Etoile) and the A1 motorway to Brus- sels. Offices are mainly located alongside the Route d’Arlon and in the Hospital sector

I Facilities There are a good choice of restaurants, a large shopping centre (La Belle Etoile) and extensive sports and leisure facilities (Les Thermes).

I Tenancy profile The sector is a choice location for back-office activities or corporate IT and Communications companies requiring direct and quick access to the City.

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 15 I.4. MARKET FOCUS PER SECTOR

I.4.2. DECENTRALIZED - WEST

BERTRANGE

A FEW KEY FACTS Total Office Stock 82'000sqm Vacancy Rate 28% Availability 22'960sqm Take-up 5'360sqm Deliveries /

MORE SECTOR FACTS I Accessibility Bertrange is conveniently located next to Strassen at the Western gate of the city of Luxembourg. The location is easily accessible via the A1 motorway, while providing easy access to the CBD via the «route de Longwy».

I Facilities Bertrange offers a large choice of restaurants, kindergartens, and re- tailers due to the presence of the City Concord shopping centre and various gym amenities.

I Tenancy profile Bertrange is the preferred location for back-office activities, IT and Communications companies requiring direct and quick access to the City (e.g. City Group, KPMG, La Mondiale Europartners etc.).

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 16 I.4. MARKET FOCUS PER SECTOR

I.4.2. DECENTRALIZED - WEST

MAMER / CAPELLEN

A FEW KEY FACTS Total Office Stock 72'000sqm Vacancy Rate 7.4% Availability 5'328sqm Take-up 468sqm Deliveries /

MORE SECTOR FACTS I Accessibility Capellen enjoys excellent accessibility thanks to the nearby A6 mo- torway connecting and close to the Bel- gian border where traffic is usually less intense and frequent than in the surrounding sectors of the city of Luxembourg.

I Facilities The area gives access to a fair choice of restaurants, shopping centres (e.g. Match), kindergartens and sports facilities.

I Tenancy profile This is a sought-after location for Belgian corporates looking for proximity to Belgium, as well as IT service providers (Tata Consul- ting, SD Worx, Dell, Fujitsu, IBM, etc.).

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 17 I.4. MARKET FOCUS PER SECTOR

I.4.2. DECENTRALIZED - WEST

WINDHOF

A FEW KEY FACTS Total Office Stock 36'000sqm Vacancy Rate 17.0% Availability 6'120sqm Take-up 108sqm Deliveries 4’900sqm

MORE SECTOR FACTS I Accessibility Windhof is located between Capellen and the City of Luxembourg. Due to the low office density, the sector does not suffer from recurrent traffic jams, even though it is only accessible via secondary roads. It is particularly convenient for Belgian workers and corpo- rates.

I Facilities Although the sector is relatively small, Windhof property owners have made the necessary investment to offer their tenants good and healthy catering services (e.g. at the WBC site, W22, and Solarwind). Most of the properties have showers and locker room facilities for joggers.

I Tenancy profile Windhof is a cheaper alternative to Capellen and is mostly an indus- trial area, although small quality offices have also been developed there. It is typically a convenient location for small Belgian compa- nies that do not need visibility and are looking for affordable rents and good accessibility from Belgium.

I Expected delivery for the coming six months /

I New deliveries for the period Eco2: 4’900sqm

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 18 I.4. MARKET FOCUS PER SECTOR

I.4.3. DECENTRALIZED - SOUTH

LEUDELANGE

A FEW KEY FACTS Total Office Stock 68'000sqm Vacancy Rate 17.2% Availability 11'696sqm Take-up 1'480sqm Deliveries 14’201sqm

MORE SECTOR FACTS I Accessibility Located alongside the motorway connecting Luxembourg and Esch, the area is easily accessible and gives smooth access to the city of Luxembourg and to Gasperich. The area, with high development po- tential, benefits from a good road infrastructure and good bus connections with the Station and nearby sectors.

I Facilities The area is well-served with kindergartens, gym facilities, restaurants and retailers (sport, furniture, automobile, grocery), several within walking distance of most of the office buildings.

I Tenancy profile Leudelange has profited from the recent relocation and expansion of major insurance companies (i.e La Luxembourgeoise, le Foyer, Raiffeisen) which constitute a significant part of the tenancy. Nevertheless, the upper area of the sector remains retail-focused and the lower area still hosts haulage and sto- rage facilities. Some large-scale and quality developments are planned (e.g. L2 by Codic, office extension of Le Foyer Assurances, etc.).

I Expected delivery for the coming six months /

I New deliveries for the period Leasplan (extension): 701sqm Raiffeisen: 9’000sqm Loterie Nationale: 4’500sqm

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 19 I.4. MARKET FOCUS PER SECTOR

I.4.3. DECENTRALIZED - SOUTH

HOWALD

A FEW KEY FACTS Total Office Stock 64'000sqm Vacancy Rate 6.1% Availability 3'904sqm Take-up 2'329sqm Deliveries /

MORE SECTOR FACTS I Accessibility Howald provides very good accessibility to France and Belgium via the A1 motorway and gives easy and quick access to the nearby City of Luxembourg.

I Facilities Shopping Centre Cactus and Howald Shopping Centre provide a good choice of catering and retailers.

I Tenancy profile Howald has become over recent years a privileged location for finan- cial Industry players looking for high standard office properties and good access to the city of Luxembourg (e.g. SEB, BGL BNP Paribas, etc.).

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 20 I.4. MARKET FOCUS PER SECTOR

I.4.4. DECENTRALIZED - EAST

AIRPORT

A FEW KEY FACTS Total Office Stock 157'500sqm Vacancy Rate 14.4% Availability 22'686sqm Take-up 5'714sqm Deliveries /

MORE SECTOR FACTS I Accessibility The Airport area is the natural extension of the Hamm-Neudorf and Kirchberg sectors east of the City.It is also accessible via the motorway leading to Germany. The nearby airport terminal, within walking distance from most of the office buildings of the sector, offers extensive parking facilities.

I Facilities The area has three hotels of good quality, a golf course with two res- taurants, two kindergartens, and a car wash. The EBBC site will soon open a restaurant in its A building.

I Tenancy profile Airport accommodates the headquarters of Ferrero, JP Morgan, Schroeders, etc., as well as numerous small and mid-sized corpo- rates, mostly active in the financial industry.

I Expected delivery for the coming six months Findel F6: 11’730sqm

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 21 I.4. MARKET FOCUS PER SECTOR

I.4.4. DECENTRALIZED - EAST

MUNSBACH

A FEW KEY FACTS Total Office Stock 62'000sqm Vacancy Rate 2.3% Availability 1'426sqm Take-up 310sqm Deliveries /

MORE SECTOR FACTS I Accessibility Munsbach is sector that is furthest East from the City of Luxembourg but nevertheless it is only 10 minutes by car from Kirchberg and 5 minutes from the Airport.

I Facilities The sector has recently welcomed the delivery of a contemporary hotel with a public restaurant on its ground floor, the largest of the zone with Kampf-Kohler (about 50 tables).

I Tenancy profile Although a small sector, Munsbach accommodates some major cor- porates, including Ernst & Young, Fernbach Software, Deutsche Post- bank, LRI, Cetrel, and Luxair.

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 22 I.4. MARKET FOCUS PER SECTOR

I.4.4. DECENTRALIZED - EAST

CONTERN / SANDWEILER

A FEW KEY FACTS Total Office Stock 22'000sqm Vacancy Rate 9.5% Availability 2'090sqm Take-up 3'285sqm Deliveries /

MORE SECTOR FACTS I Accessibility Contern and Sandweiler are two distinct activity areas situated south of the City of Luxembourg. Thebusiest of these is Contern, which lies 10 minutes by car from the City (via Hamm-Neudorf) or from Hesperange-Howald.

I Facilities Three restaurants are located in the sector (Lux Tech Center, Campus Contern, Espace Contern).

I Tenancy profile The sector mostly accommodates logistics companies (e.g. Kuhn & Nagel, DHL), documents storage (e.g. LAB), and corporates active in the financial services or telecoms (e.g.Siemens).

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 23 I.4. MARKET FOCUS PER SECTOR

I.4.5. DECENTRALIZED - NORTH

WALFERDANGE

A FEW KEY FACTS Total Office Stock 7'200sqm Vacancy Rate 5.0% Availability 360sqm Take-up / Deliveries /

MORE SECTOR FACTS I Accessibility Walferdange is mostly residential, with small activity and industrial zones. The sector is easily and quickly accessible from Kirchberg and the City Centre by car or public transport.

I Facilities The area benefits from a good variety of restaurants and the presence of the Hilton, the largest hotel facility after Sofitel in Kirch- berg.

I Tenancy profile Most tenants are active in light manufacturing, or are small corpo- rates, or provide services for the State.

I Expected delivery for the coming six months /

I New deliveries for the period /

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 24 I.4. MARKET FOCUS PER SECTOR

I.4.6. ESCH-BELVAL

ESCH & BELVAL

A FEW KEY FACTS Total Office Stock 115'000sqm Vacancy Rate 3.0% Availability 3'450sqm Take-up 4'970sqm Deliveries 3'800sqm

MORE SECTOR FACTS I Accessibility This sector mostly comprises the city of Esch-sur-Alzette and its sur- roundings (ie Ehlerange, Sommet, etc.) and the new quarter of Belval. It is particularly well-located for French and Belgian corporates and commuters because it is close to the borders. The City of Luxem- bourg is some 15 minutes away by motorway. A brand new train station connects Belval to the City of Luxembourg.

I Facilities Belval is well-served by amenities and cultural centres (e.g. Rockhall, Belval Plaza shopping centre) bringing all sorts of services to the nearby tenants and residents. Large and modern hotel facilities have been recently developed to further improve the area’s attractiveness.

I Tenancy profile RBC was the first major corporate to relocate its headquarters to Belval. The University, public research centres… have followed and are expanding on site, making the sector the choice location for High Tech corporates.

I Expected delivery for the coming six months n/a

I New deliveries for the period Southlane I: 3’800sqm

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 25 II. GLOSSARY A I

AVAILABILITY INDEXATION Total gross surface to let avai- Binding contractual clause re se- lable on the market at the date of quential performance changes in present publication. value of the parties’ respective be- nefits against those of an agreed Total space is composed by both benchmark, e.g., in Luxembourg, Direct and Sub-letting availability. an index based on NCPI C2 cost Direct availability: space for of living defined by STATEC. which a lease (a Principal Lease) is signed directly between the INSTITUTIONAL INVESTORS tenant and the owner Public or private establishments, Sub-letting availability: space organizations, financial and mu- for which a lease (usually called tual institutions which, due to “a sub-lease”) is contracted their function and the guarantees between the tenant and a princi- they are legally obliged to provide pal tenant. Sub-leases can never to the public, invest some of the exceed the expiry date of the funds they hold in real estate. Principal Lease.

N E

NEW DELIVERIES EFFICIENT BUILDING Total of gross area coming out Office building offering producti- of the Pipeline and increasing the vity gains due to its equipment, Total Office Space in the course networks, communication tech- of a specific period. niques and material resources.

P G

PIPELINE GREEN CERTIFICATION Estimated total gross area either Certification of the environmental scheduled or estimated to be de- value of renewable energy gene- livered. When completed, those rated in and by a building. Certi- areas will be substracted from fications known in Luxembourg the Pipeline and will increase the include HQE (France), BREEAM Total Office Stock and eventually (Great Britain), LEEDS (USA), and the Availability. DGNB (Germany). PRINCIPAL TENANT GROSS AREA The tenant who has contracted The “carpet area” increased by a directly with the owner of the pro- portion of common areas and cal- perty the tenant occupies. culated according a normalized standard recognized in Luxem- bourg. Gross area is usually the basis of calculation for both rent and service charges.

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 26 R V

RENT VACANCY RATE The amount paid for the use Proportion of vacant premises of the property by the tenant, available for rent or for sale in the usually expressed monthly, per Total Office Stock. sqm, and excluding VAT and Service Charges.

S

SERVICE CHARGES Cost of routine maintenance and minor repairs to services that faci- litate use of the building in which a premises is situated, e.g. eleva- tor and common area (but not pri- vate charges related to local use, e.g. electricity, water, gas).

SUSTAINABLE ARCHITECTURE Environmentally conscious archi- tectural design techniques that seek to minimize the negative en- vironmental impact of buildings by enhancing efficiency and mo- deration in use of materials, ener- gy, and space.

T

TAKE-UP The total space from the Availa- bility for which a lease has been agreed (Direct or Sub-letting) expressed in gross sqm over a specific period.

TOTAL OFFICE STOCK The combination of all the office properties delivered on the mar- ket at the date of the publication. The Total Office Stock is the sum of both the Availability and the Rented Space. Total Office Stock calculation is based on the Gross Area.

REALCORP MARKET REPORT - H1-2013 - LUXEMBOURG Page 27 MARKET REPORT H1-2013 LAST UPDATED IN OCTOBER 2013 The content of this report is edited by RealCorp Luxembourg S.A. Although all facts have been rigorously verified, RealCorp makes no warranty or representation as to accuracy or completeness. No reproduction, publication or copying allowed without written agreement from RealCorp. ©REALCORP LUXEMBOURG - 10/2013

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