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The property market

On 24/10/2016

Interview with Lex Fischbach : finding that rare pearl, a challenge 

How does the property market evolve ? 

A dynamic employment market, an immigration country par excellence, and exceptional demographic growth. These characteristic elements of Luxembourg necessarily have repercussions for the property market, which is under constant tension. To this are added new socio-demographic trends, which have further increased demand for accommodation. How does one find a way through all this? Detailed analysis with Lex Fischbach of the company FISCHBACH Realtors & Developers.

Mr Fischbach, what is the status of the property market?
It is in quite a good state. Sales are being made, demand is high, and clients have proved very responsive as a result of this.

You have many years of experience of this sector. What were the turning points from your perspective?
At this point I would prefer to comment on the last 10 years, because the years before that are already long in the past and, I imagine, of less interest in relation to the current situation. In recent years, we have suffered from the effects of the 2008 economic crisis. This year represents a decisive turning point for the Luxembourg property market. Purchasers have become more prudent, more selective and more reticent. In consequence, we have had to change our commercial approach, in other words, reconsidering the geographical sector in which it was formerly a good idea to invest in land for building, redefining the sizes of apartments and houses, and offering different types of land. Since 2006, in other words, just before the crisis, I noticed a fall in our turnover only in 2008 and 2010. Since 2010, there has once again been a slight growth, which has been steady and constant.

I imagine that this trend is very much a relative one and also dependent upon the property available for sale?
Indeed. If we offer residential accommodation in the territory of the ville de Luxembourg, we will have very high demand, higher than in any other commune. And even there, there are districts more sought after than others … In general, demand is higher in the large agglomerations. We have recently seen an entire residence consisting of 8 individual units being reserved within a single day. This level of responsiveness is not a surprise for us. Essentially, the client’s choice is guided by the location of the property on offer, the quality of the construction and execution, the architecture, the reputation of the developer and the builder, the professionalism of the agent handling the property, and by the price.

Is competition a stimulating factor? Or on the other hand is it a real problem?
For several years, we have seen an accumulated growth of competition in business. The arrival of very ingenious young people, who are honest and transparent in their dealings, is very motivating and beneficial for the market. Naturally, as with everything, there are black sheep, of whom one should really very wary. Their initial training does not come from the right people and their primary objective is “a fast buck”. However, in property, contrary to the popular misconception, there is no quick money to be had… This profession is conducted through experience accumulated over many years, involving sound management, but also good relations. The time for negotiation for the acquisition of land through to its development is very long and onerous. A long presence on the market is an advantage in terms of standing, but above all good cash flow and transparency in targeted intentions are the key success factors. Selling is one thing, but without a purchase, there is no sale.

Are you still able to offer your clientele exceptional properties?
For many years, we have had numerous requests from wealthy individuals from abroad seeking to locate to Luxembourg for various reasons and who were looking for exceptional properties. However, we were never able to offer the “Château in the city” simply because there were none. Otherwise there are still some fine villas that come with many hectares of land, some impressive residences of over 300 m2, for renovation or otherwise, which come onto the market.

These days, does residential accommodation tend to be built that is the reserve of the élite, or can families of modest means still aspire to own a property?
We build residential property and houses of quality that are accessible for everyone throughout the territory of the Grand Duchy of Luxembourg: apartments and houses of various sizes to meet various different needs. But everything has its price. A quality service has a corresponding price tag. Those who sell cheaply are not destined for a long career, but not only this, clients run considerable risks in accepting this kind of deal. Clients must remain vigilant concerning the propositions of certain rather unscrupulous individuals who operate on the market. Building properly for a low price is in the realms of the impossible.

Has the profile of the buyer changed over the years?
Absolutely. Buyers are increasingly well-informed and demanding. Prices are high, so buyers are therefore nervous about investing in an asset that might not be reliable. The estate agent’s profession has rather a negative connotation. One must be able to reassure the client. The level of demand is so high that our parent company, the Groupe Arend & Fischbach group has developed a reservation system, which enables our clients to place a reservation on a property, to allow them time for reflection. The increase in prices per m2 has been less marked since 2008, but it is important for us to consider every individual’s budget in order to be in a position to offer properties that corresponds to our clients’ requirements and needs.
Finally, the profile of the buyer in the existing property sector is very different to the profile of the buyer in the context of future construction. They can visit the property and obtain a feel for the work that will need doing, or produce an actual estimate for the final budget. For new build - which in this case relates to the programme proposed by the Groupe Arend & Fischbach - the client is not in such a hurry to find their property and is ready to wait for up to two years before “taking delivery”. They must rely on the plans, the technical specifications and the developer. One must also distinguish between these two types of purchaser, On the one hand, those who buy for their own needs, and on the other hand, those who are investing for a return on the letting. Finally, there are those who acquire residential properties with a view to providing care services for the elderly.

How do you perceive the future?
One should not forget that Luxembourg is minuscule market place in comparison to the size of Europe and the world in general. Some economic analysts warn us that what happened in 2008 was only the tip of the iceberg. We should be honest with ourselves. Even though this economic context – because of its size and geographical location – is very favourable to the property market, one must remain vigilant, given the EU changes in policy: this involves the capability of reacting accordingly. On the other hand, and more substantively, we have bread on the table for some years to come. Projects are in the authorisation pipeline and others will be submitted. Those who evolve with sincerity, responsibility and transparency will have earned their place amongst the protagonists in the Luxembourg property market.
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