Capelli Group: the main project in Howald is at a standstill

Work on a major construction project in the Howald district of Luxembourg’s capital is on hold after the French real estate group behind the scheme was placed into receivership by a Paris court.

Work on the “South Village” project, which originally planned to build 130 homes and office spaces, along the Boulevard des Scillas has ground to a halt following the difficulties encountered by the French group Capelli.

On 5 March, “the Paris Commercial Court placed several companies in the Capelli group under receivership with an observation period of six months”, the group said in a press release.

Like all players in the sector, the group said it has been “confronted for nearly three years now with the collapse of the property market, particularly the market for new collective housing, which has recorded a historic fall of more than 50% between 2021 and 2024”.

The group also points out that the application to place the company in receivership was made “on its own initiative and as part of its ongoing restructuring”.

Potential agreement with a new partner

What impact will this court ruling in France have on the company’s operations in Luxembourg? The Capelli Group has been present in the Grand Duchy since 2013, with its name prominently displayed at Belval on the two white Capelli Towers.

The group has carried out other projects in the country, such as the Phoenix residence in Bonnevoie, in the capital. It also has a branch in the Howald district, and employs nine staff in Luxembourg.

Where do things stand today with the flagship project in Howald? Asked by Virgule, Christophe Capelli, Chairman and CEO of the Capelli Group, said that “we had all the information we needed to obtain the financial guarantee of completion” before problems arose.

“Then our partner in the project, an investment fund, didn’t want to go ahead with it. As things became complicated with this partner, I approached others. We’ve had two or three expressions of interest, and we’re in negotiations. We still believe in this project, even though we will certainly no longer have a majority stake,” he said.

The Shift and Edge buildings, being developed by Baltisse, shown on the left, are due to be joined by the South Village complex once completed © Photo credit: Virgule/Pascal Mittelberger

“South Village is therefore on hold,” explained Capelli. “We hope to conclude the deal within the next two to three months with the fund that will take over. Construction could start by the end of 2025.”

No plans to stop business in Luxembourg

The Capelli Group is also experiencing difficulties with other property developments in Luxembourg, such as the Oschterbour development in Oberkorn, something which Capelli does not deny.

In the case of the ‘Oschterbour’ project, Capelli explained there has been a dispute with an insurance broker, resulting in the financial guarantees for completion of the project being blocked.

More generally, the CEO refers to difficulties in the wider property sector, both in France and in Luxembourg, and describes the application for receivership as a “technical choice” in view of the reluctance of a minority of bondholders to approve the debt restructuring plan presented by the group last December. “90% were in agreement”, he said, “but we needed the green light from everyone.”

Capelli remains confident about the future of his group and its current and future projects. “In France, we have joined forces with a subsidiary of Société Générale, Sogeprom. Everything we produce, we now do with them. We have the financing, the financial guarantees of completion for the projects.”

In Luxembourg, Capelli said, “we have no intention of stopping or closing our business. Admittedly, there are operations to be settled. But the group has been in existence for 40 years, and I’ve been running it for 30, so we’re not just starting out”.

“Following the example of the South Village project in Howald, and as we were able to do in France with Sogeprom, the idea is to find a local partner,” he said.

Progress on other sites

On the left-hand side of the road, coming from Luxembourg City, work on the new headquarters of the Luxembourg Red Cross has taken shape, and construction has started on a residence combining shops, offices and flats right next door.

The future headquarters of the Red Cross along Bulevard des Scillas in Howald © Photo credit: Virgule/Pascal Mittelberger

Opposite, on the land between the railway tracks of the CFL station in Howald and the rue des Scillas, the project linked to the “AXS Howald” public works plan is also making headway. The three buildings by the developer Baltisse, called “The Edge”, “The Shift” and “The Corner”, are already well under way, right next to Bétons Feidt. This project is to be complemented by two other buildings that will make up the South Village development by the Capelli Group.

(This article was originally published by Virgule. Translation and adaptation by Lucrezia Reale)