Luxembourg’s property market is under pressure and so are the country’s real estate agencies. A pending lease reform could exacerbate a shortage of business in an oversaturated sector, says Jean-Paul Scheuren, president of the Chambre Immobilière.
Delano: How has the pandemic disrupted business in real estate?
Jean-Paul Scheuren: There are restrictions; you have to take precautions and organise differently. There are fewer visits, which means that you must have a better digital presence than before. This is what we’re seeing: better photos and films, data presentation. You only visit with people who are really interested. On the side of the developers, we are seeing delays in getting permits, which will contribute further to problems of demand.
Has there been less demand because of the pandemic, taking some of the pressure out of the market?
People seem to be selling less. They aren’t entering the market. But the market is still there. For investors, it’s a secure asset. People buying for themselves have had time during the pandemic to think about their situation. People are going more into the countryside. They don’t necessarily want to live in Luxembourg City, but see some green and have the opportunity to get outside. We see a rush on these projects.
A reform of lease agreements proposes to split agency fees between owners and tenants. What risks does this pose for real estate agents?
This is happening at the worst moment. There already is a lack of mandates and that also means a lack of revenue for brokers. We see people really struggling financially. Everybody thinks that brokers are gold diggers but getting rich quick doesn’t exist. When you start splitting the commission, it risks that owners say they are going to do it themselves. Or rents will get even higher, because owners will put the financial burden on the tenant. It’s a political message to try and find someone responsible for the market situation. We recognise that there is a real problem with prices, but everything on the table right now isn’t a solution.
If there are too few mandates, you could also say there are too many agents.
There are too many. There are 1,000 agents getting their permit every year. We don’t need more than 150 or 200. The market cannot absorb them. This has to stop. We don’t want people with no training, delivering a bad service. It has to be a professional environment. We are working on an academy and our objective is to have more professional entities. If you only see the commission, then you should be doing a different job.
Where do you see the role of the chamber to act as an intermediary and a place where people can lodge complaints against agencies?
For ten years now, we have a disciplinary commission where you can make complaints against members or even non-members. Professional rules should be applied. The commission is composed of one lawyer and two assessors coming from the profession. We also started a working group on controlling agencies. In one of ten cases analysed, the agent doesn’t even have a permit. We are still only a business federation. But more and more, people are realising that we must do something to control access to the market and control what is happening on the market.
What do you see as the biggest challenge for 2021?
It will be very difficult to estimate how the prices will develop. It will be very interesting to see where the market goes. Digitalisation is a big challenge, but the biggest challenge is to come back to our role of intermediary between the buyer and the seller, and this works best when you separate them, when the buyer and the seller both have a broker to reach the best solution for both parties. This will be the future of the market.
This interview was first published in the April edition of Delano. To subscribe, visit the Maison Moderne shop.
