EVS 2025-compliant property valuation in Luxembourg
The European Valuation Standards (EVS) 2025, published by TEGoVA, constitute the reference framework for all professional property valuations in Luxembourg. The CSSF, in its circular 21/773, requires credit institutions to use EVS-compliant valuations for properties accepted as collateral.
In Luxembourg, market value is defined as the most probable price at which a property would sell, at the valuation date, after adequate marketing, between a willing seller and buyer, each acting independently. This definition, aligned with Article 4(1)(76) of the CRR, is essential for banks' LTV ratio calculations.
The valuer must document the valuation date, the purpose of the valuation (mortgage security, transaction, IFRS accounting, succession), any special assumptions and the data sources used. The valuation report must be signed by a qualified valuer — in Luxembourg, there is no protected title, but professional practice relies on REV (Recognised European Valuer) qualifications awarded by TEGoVA.
The 5 recognised valuation methods
Our valuation tool integrates the five valuation approaches recognised by international standards:
- Comparison method: direct approach based on recent transactions of similar properties. In Luxembourg, we use the AED (Registration Administration) database which records all notarial deeds. Adjustments cover area, location, floor, condition, energy class and outdoor amenities.
- Capitalisation method: net rental income is capitalised at the yield rate observed in the area. Prime office yields in Luxembourg City (Kirchberg, Cloche d'Or) ranged between 4.0% and 4.5% in early 2025 per JLL and CBRE.
- DCF (Discounted Cash Flow) method: projection of net flows over 10 years with terminal value. Particularly suited to multi-tenant buildings with leases expiring at different dates. The discount rate is determined by the Luxembourg real estate WACC.
- Mortgage Lending Value (MLV): prudent value required by the CRR regulation (Article 229) for exposures secured by real estate. It incorporates a prudence discount of 10 to 20% from market value.
- Term and reversion method: distinguishes between contractual income (term) and expected market income after lease expiry (reversion), capitalised at differentiated rates.
Reconciliation and method weighting
A professional valuer never relies on a single method. Reconciliation involves assigning a weight to each approach based on the reliability of available data and the property type:
- For a standard apartment in an urban area, comparison receives a predominant weight (60-70%) as transactions are numerous and homogeneous.
- For an investment property, capitalisation and DCF are preferred (combined weight of 70-80%), with comparison serving as a check.
- For an atypical property (castle, building land, rural property), the valuer relies more on the residual method or adjusted comparison, with wider confidence intervals.
Our reconciliation algorithm uses a Bayesian weighting model that adjusts weights based on the number of available comparables, value dispersion and rental data depth.
Valuation report structure
An EVS 2025-compliant valuation report includes the following elements:
- Property identification: address, cadastral references (section, parcel number), physical description, easements and real rights registered in the Land Registry.
- Legal context: co-ownership regime, emphyteutic lease, building rights, planning compliance (PAG/PAP).
- Local market analysis: price trends, transaction volumes, supply and demand, infrastructure projects (tramway, roads, activity zones).
- Method application: calculation details, data sources, justification of parameters used (rates, comparables, reference rents).
- Reconciliation and conclusion: retained value, confidence interval, any reservations, conditions precedent.
The report generated by tevaxia follows this structure and can serve as the basis for a formal appraisal, subject to validation by a qualified valuer.