Irish Life secures largest real estate transaction by an Irish investor in Luxembourg (LU/IE)

Irish Life Assurance plc has confirmed that it has agreed to acquire, by way of a forward commitment, a 24,000-m² office project in Luxembourg. With a base value of approximately €165 million, this will be the largest transaction undertaken to date by an Irish investor in Luxembourg. This is Irish Life's first acquisition in Luxembourg and they were advised by CB Richard Ellis Belgium.

Kohlenberg in Luxembourg city.

When completed in 2010, the project will comprise two state of the art Grade A buildings, totalling 24,000 m² of office accommodation and over 195 car parking spaces. The project known as 'Kohlenberg' is located in Cloche d'Or, a prominent head office location in Luxembourg city. The properties will also benefit from high visibility on the Route d'Esch a main artery into the city. Occupiers in the immediate area include Hewlett Packard, PriceWaterhouseCooper, ING, Luxembourg Television, the European Parliament and the European Commission.

The project is being developed by Allfin S.A. a Brussels based real estate development company specialising in the development of high-end office and residential property developments in Belgium and Luxembourg. Key to Allfin's strategy is the ability to combine a prime location, timeless and attractive architecture with state of the art technology. This was evidenced when one of their projects, the Mondrian in Brussels, won the prestigious Business Centres Category at the MIPIM awards in 2005. Allfin's track record in securing high calibre tenants in their projects is very strong and several European Union entities, government departments and international blue chip companies occupy their buildings.

The transaction was sourced by Hilary Fitzgibbon, Head of Property at Irish Life's newly formed wealth management group. Commenting on the transaction, Hilary Fitzgibbon, said: "Luxembourg is a very stable market with an excellent economic outlook which is forecast to perform well above the EU average. Whilst the presence of the European Parliament, European Court of Justice and EUROSTAT all contribute to the stability of the market, the presence of approximately 220 financial institutions cannot be ignored."

"Luxembourg is the world's second largest Investment Fund market after the US and has by far the highest cross border fund administration in Europe. It has been reported that fund managers are seeking to improve efficiency of their structure by basing their operations in Luxembourg and using the flexible and reliable legal and fiscal environment of the country to sell across the EU and even beyond. The services carried out by these institutions are predominately of an administration nature. Therefore, the financial sector in Luxembourg is less susceptible to money market fluctuations. For example the financial sector in Luxembourg grew by an enormous rate between 2001 – 2004 when the same sector in other countries was in decline."

She went on to say: "In addition to the strong economic story, the property market fundamentals are also very attractive. The development pipeline is very tight and this combined with exceptionally low vacancy levels for Grade A office buildings means that the vast majority of projects are pre-let before completion. This, in turn, has also led to very good rental growth which is expected to continue."

Irish Life's advisor, Maxime Xantippe, Managing Partner, CB Richard Ellis Belgium, commented: "We are delighted to have worked closely with Irish Life in securing this off market transaction. Over the past 12 months, Luxembourg has appeared on the radars of many international investors and competition has been fierce, especially for well located modern office buildings such as the Kohlenberg project. For example in 2006, €1.2 billion was spent on commercial property investments in Luxembourg. For the first six months of 2007, the figure was already €1.4 billion. We expect investor demand to remain strong in the future and further yield compression cannot be ruled out."

Hilary Fitzgibbon also commented: "With the Ko

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