Luxembourg real estate valuation: TEGOVA EVS 2025 methods

Direct comparison (Sales Comparison) is most used for residential: analysis of recent transactions on similar properties in the same area, adjusted for differences (area, floor, condition, orientation, parking, EPC). Reliable method when the market offers comparable references. In Luxembourg, LISER feeds this approach via hedonic models that isolate each characteristic's contribution to price.

Income Capitalisation divides stabilised net annual rental income by a capitalisation rate reflecting market risk and return. LU residential cap rates: 3 to 5% by location and asset class. The Discounted Cash Flow (DCF) approach projects cash flows over 10-15 years and discounts them at a suitable WACC (typically 5-9%), with a terminal value; mandatory for commercial and hospitality assets per EVS 2025.

The LU market has high-quality public sources: Housing Observatory (observatoire.liser.lu) — transaction prices by municipality and type, rent index, monthly tracking; STATEC — IPIR (Residential Property Price Index), construction price index, demographics; data.public.lu — geoportal data, cadastre, PAG/PAP plans; AED land registry — notarial sale deeds (actual prices published quarterly).

For tertiary (offices, retail, hotels): quarterly reports from international firms JLL, CBRE, Cushman & Wakefield, Inowai (prime rents, vacancy rates, observed yields). For regulated rental valuation: the tevaxia legal rent calculator automates the 5% rule with STATEC coefficients. For hotels: STATEC overnight stays observatory, RevPAR by category.

The price/sqm spread between LU areas can be x4: Luxembourg City Centre (€15,000-20,000/sqm) vs rural cantons (€4,000-6,000/sqm). Within a municipality, sub-neighbourhoods differ (school proximity, transport, green areas, retail). Living area and layout matter (T2-T3 value better per sqm than T6+ for the rental market).

General condition and finish quality: a renovated property is valued 10-20% above an equivalent property to renovate. Energy performance has a growing impact: LISER studies put the value spread per EPC class at 3-8% (an F→C jump can boost value by 10-25%). Outdoor spaces (garden, terrace, balcony) and parking typically add 10-15% of value. Orientation, quietness and floor (with elevator) also play a role.

European Valuation Standards 2025 (TEGOVA) define internationally recognised bases of value: Market Value (hypothetical arms-length cash transaction at the valuation date), Investment Value (value to a specific investor under their criteria), Fair Value (IFRS 13 fair value for audited accounts), Mortgage Lending Value (prudent mortgage value for banks).

Any professional TEGOVA valuation report sets out: the basis of value, the method(s) applied, data sources, key assumptions and special conditions (subject to resolutory condition, renovation to be completed, etc.). In Luxembourg, REV or TRV certified experts (by the national INREV institute) guarantee compliance with these standards and put their professional liability on the line.