Economic Context
Luxembourg's economy is expected to keep growing at a modest pace, with Moody's trimming its 2026 forecast slightly to 1.8% as private consumption softened. Inflation remained well above the eurozone average in June, and the wage indexation triggered that month is likely to keep pressure on incomes and costs in the period ahead. Consumer confidence stayed firmly negative through the second quarter, weighed down mainly by pessimism about the wider economy rather than households' own finances. Against this backdrop, retailers are operating in a market where footfall holds up but shoppers remain cautious about bigger purchases.
Occupier Market
Retail take-up totalled 8,968 sq m across 30 transactions in H1 2026, split between 2,911 sq m in the first quarter and 6,057 sq m in the second. This is down 53% year on year from 18,905 sq m in H1 2025 and 32% below the five year H1 average of around 13,200 sq m. Deal count held up better, falling only 14% to 30 transactions, while average deal size dropped to 299 sq m from 540 sq m, since last year's first half included several large pre-lettings such as Engelhorn and a foodhall at GridX. Fitness led by volume this half year, on the back of Basic-Fit's 1,690 sq m letting on Avenue de la Gare, the largest deal of the period. Food and beverage remained the most active sector by deal count, with eight transactions totalling 1,642 sq m. Prime rents held stable at €145 per sq m per month on the high street and €25 out-of-town, while shopping centre rents softened slightly to €87, reflecting more selective demand.
Investment Market
No retail investment transactions were recorded in Luxembourg in H1 2026, a quiet half year that follows a record 2025 driven by the sale of two Knauf shopping centres. The lack of activity reflects a shortage of product coming to market rather than weaker investor appetite, and comparisons against last year's exceptional volume remain distorted as a result. Prime yields stayed unchanged at 4.50% for high street, 6.00% for out-of-town and 6.25% for shopping centres, though with no transactions completed these levels reflect our view of pricing rather than fresh evidence. Luxembourg's ten year government bond yield stood at 3.19% at the end of June, narrowing the spread to prime retail yields slightly. The next completed transaction will be an important test of where pricing actually sits.
