Wearing a green military uniform topped by a yellow sash, Henri, 70, ended a 25-year reign signing his abdication at the Grand Ducal Palace in the presence of guests including the Dutch and Belgian royal couples.
“You have carried out this role with the perfect balance between dignity and warmth, seriousness and openness, formality and humanity,“ Frieden said.
At 11:00 am (0900 GMT) it will be Guillaume's time to shine as he is officially appointed head of state during a swearing-in ceremony at the parliament.
The small European nation of about 680,000 people lit up with pomp and pageantry as foreign dignitaries flocked to the financial hub to mark the historic occasion.
“They should be sure to watch television because, for once, there will be a lot of talk about Luxembourg,“ he said.
Guillaume, 43, will be the seventh sovereign of the House of Nassau-Weilburg, which has reigned over Luxembourg since 1890 and shares its lineage with the Dutch royal family.
But observers say he might bring a more personal approach to the Grand Duchy.
“The new Grand Duke is 30 years younger than his father and was educated in Luxembourg schools, unlike his father, who had private lessons,“ said Frieden, the prime minister.
The heir apparent is the eldest of five children born to Henri and Grand Duchess Maria Teresa -- the Havana-born daughter of a wealthy Cuban businessman, who lived in exile in Switzerland.
“But I don’t really expect a whirlwind of modernity,“ he added.
Guillaume studied in Luxembourg and Switzerland before attending the Sandhurst Royal Military Academy in Britain.
Guillaume has been married since 2012 to Countess Stephanie de Lannoy, who hails from a noble Belgian family and is known to be passionate about art and literature and speaks French, Luxembourgish, German and English.
Celebrations for his accession to the throne are planned throughout the country until Sunday - AFP
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