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Yes, the analysis of Luxembourg City's property market is included in our pack
Luxembourg City remains one of Europe's most expensive property markets as we reach mid-2025, with average residential prices at €11,815 per square meter.
The market has stabilized after a 5% price drop from its March 2024 peak, with rental demand staying strong due to the city's role as a major financial and EU hub. Current mortgage rates of 3.5-4.5% and available tax incentives make buying attractive for long-term residents, while the rental market offers solid yields of 3-4% for investors targeting business districts and expat communities.
If you want to go deeper, you can check our pack of documents related to the real estate market in Luxembourg City, based on reliable facts and data, not opinions or rumors.
Luxembourg City's property market offers opportunities for both buyers and investors despite high prices, with stabilizing values and strong rental demand in key districts.
The decision between buying and renting depends heavily on your timeline, with buying favored for stays over 5 years and access to current tax incentives through June 2025.
| Property Type | Price Range (€/m²) | Best Districts |
|---|---|---|
| Studio Apartments | €9,000-€14,000 | Bonnevoie, Hollerich, Gare |
| 1-2 Bedroom Apartments | €10,000-€15,000 | Kirchberg, Gasperich, Limpertsberg |
| 3+ Bedroom Apartments | €11,000-€16,000 | Belair, Limpertsberg, Kirchberg |
| Houses/Townhouses | €8,000-€12,000 | Cessange, Mühlenbach, Periphery |
| Luxury Properties | €15,000+ | Belair, Limpertsberg |
| Rental Yields | 3-4% gross | City center, Kirchberg, Gasperich |
| New vs Old Premium | 15-20% higher | All districts |
What types of properties can you buy in Luxembourg City in 2025?
Luxembourg City offers a comprehensive range of residential properties for purchase as of June 2025.
The market includes studios, one-bedroom to four-bedroom apartments in both new developments and older buildings with character. You can find detached houses, semi-detached properties, and terraced homes throughout the city and its periphery.
Luxury options include penthouses, duplexes, and multi-family villas, particularly in upscale districts like Belair and Limpertsberg. New builds typically command a 15-20% premium over equivalent older properties but offer modern amenities and high energy efficiency ratings.
The city municipality and private developers regularly release housing units for sale, sometimes with special conditions such as long-lease land agreements to improve affordability for first-time buyers.
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How do property prices compare to recent years and what's the forecast?
Luxembourg City property prices have experienced a notable correction from their peak in 2024.
As of May 2025, average residential sale prices stand at €11,815 per square meter, representing a 5% decrease from May 2024 when the market peaked at €12,630 per square meter in March. The price range currently spans from €9,018 to €14,308 per square meter depending on location and property type.
Rental prices average €34.45 per square meter monthly, with a range from €27.45 to €52.54 per square meter. New developments continue to command premium pricing, typically 15-20% above equivalent older properties.
Market experts predict continued stabilization through 2025 and 2026, with a slight upward trend expected as interest rates ease and buyer confidence returns. However, the rapid price increases seen in previous years are unlikely to return, making the current period more favorable for buyers than the recent peak market.
Transaction volumes have begun recovering moderately, particularly in segments like older houses, indicating renewed market activity after the 2024 slowdown.
Is it better to buy or rent in Luxembourg City right now?
The buy versus rent decision in Luxembourg City depends heavily on your timeline and financial situation as we reach mid-2025.
Current mortgage rates range from 3.5% to 4.5%, higher than recent historical lows but beginning to ease. Average apartment prices sit around €10,500 per square meter, while single-family homes average €8,500 per square meter.
Rental costs are substantial, with one-bedroom apartments averaging €1,700 monthly and two-bedroom units around €2,500 monthly. This creates a significant monthly outlay that could otherwise service a mortgage.
Buying becomes advantageous for residents planning to stay longer than 5 years, especially given current tax incentives including the increased "Bëllegen Akt" tax credit and reduced registration duties available through June 2025. Renting offers greater flexibility and lower upfront costs, making it attractive for shorter-term residents or those uncertain about their long-term plans.
The stabilized market conditions and available tax benefits make 2025 a more favorable buying environment than the peak market of 2024.
What are the most sought-after and emerging areas in the city?
| District | Profile & Status | Price Level |
|---|---|---|
| Belair, Limpertsberg | Upscale residential, green spaces, executive housing | Highest (€13,000-€16,000/m²) |
| Kirchberg | EU/Financial hub, modern developments, business district | High (€11,000-€14,000/m²) |
| Gasperich/Cloche d'Or | Rapidly developing, shopping centers, business expansion | High, rising (€10,000-€13,000/m²) |
| Bonnevoie | Value for money, diverse community, good connections | Mid-range, rising (€9,000-€11,000/m²) |
| Gare, Hollerich | Central location, urban regeneration, transport hub | More affordable (€8,000-€10,000/m²) |
| Cessange, Mühlenbach | Emerging residential, better value, improving infrastructure | Lower-mid (€7,000-€9,000/m²) |
| City Center | Historic, premium location, limited supply | Very high (€12,000-€15,000/m²) |
What properties can you get for €500K, €1M, or €2M budgets?
Your budget significantly determines the type and location of property available in Luxembourg City's expensive market.
With a €500K budget, you can typically secure a studio apartment of 30-40 square meters in central or emerging districts like Bonnevoie or Hollerich. Alternatively, you might find a small one-bedroom apartment in an older building or a new studio in developing areas.
A €1M budget opens up two-bedroom apartments of 60-80 square meters in central or upscale districts, small townhouses in peripheral areas, or new one-to-two bedroom units in prime locations like Gasperich or Kirchberg.
With €2M, you can purchase large three-to-four bedroom apartments or penthouses in prestigious Belair or Limpertsberg, or modern family houses of 150-200 square meters in the city or close-in suburbs.
Specific examples include a 19-square-meter studio in Belair for €330,000, a 47-square-meter new one-bedroom in Belair for €687,592, an 83-square-meter two-bedroom in Limpertsberg for €1,010,000, and detached houses ranging from €1,627,505 for 160 square meters to €3,679,760 for 265 square meters.
What's the complete property buying process in Luxembourg?
The Luxembourg property purchase process follows a structured legal framework requiring notary involvement.
Begin by assessing your budget and securing mortgage pre-approval, including all associated fees and taxes. Search for properties using major portals like atHome.lu, Immotop.lu, and Wortimmo.lu, alongside real estate agencies and word-of-mouth networks.
After viewings and negotiations, sign a preliminary contract with a notary and pay a deposit, usually 10% of the purchase price. The notary then conducts due diligence, checking legal and title documents over 1-2 months.
Complete the purchase by signing the final deed in front of the notary, paying the remaining amount plus fees including registration, notary, and agency costs. The property is then registered in the Land Registry, making you the legal owner.
Special consideration applies to City of Luxembourg affordable housing sales, which require eligibility verification and waiting list applications, often involving long-lease land arrangements rather than freehold ownership.
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Where should you look for properties for sale?
Luxembourg City's property search relies primarily on established digital platforms and real estate agencies.
The major real estate portals include atHome.lu, Immotop.lu, Wortimmo.lu, and Vivi.lu, which provide comprehensive listings across all price ranges and property types. These platforms offer advanced search filters and detailed property information.
Real estate agencies remain the main channel for property transactions and often handle exclusive off-market deals not advertised publicly. Established agencies have deep local knowledge and can provide valuable market insights.
Word-of-mouth and social media networks are particularly effective for rental properties and off-market sales, especially within expat communities and professional networks.
Consider engaging multiple search channels simultaneously to maximize your property options and access both listed and unlisted opportunities in Luxembourg City's competitive market.
What mistakes do buyers make, especially foreigners?
Foreign buyers in Luxembourg City commonly underestimate the total cost of property ownership beyond the purchase price.
The most frequent error involves failing to account for notary fees, registration taxes, agency commissions, and potential renovation costs, which can add 10-15% to the total investment. Many buyers overestimate their borrowing capacity or proceed without mortgage pre-approval, leading to disappointment during negotiations.
Legal complexities including title checks, co-ownership rules, and building regulations are often ignored, creating future complications. Location and property condition assessments are frequently inadequate, with buyers focusing solely on price rather than long-term value and livability.
Professional guidance from experienced agents, notaries, and mortgage brokers is essential but often skipped to save costs. Language barriers can create misunderstandings during legal processes, making translator services valuable for non-French/German speakers.
Many foreigners assume buying is always preferable to renting without considering their actual timeline and circumstances. Failing to research eligibility for tax credits, subsidies, and special programs can result in missed financial opportunities.
What's the cost of living and how does it affect property ownership?
Luxembourg City ranks among Europe's most expensive cities, significantly impacting the true cost of property ownership.
Average monthly household spending reaches €2,348 excluding mortgage payments, while families of four typically spend €6,000-€8,000 monthly including housing costs. These high living costs mean property ownership involves substantial ongoing expenses beyond mortgage payments.
Property owners must budget for insurance, local taxes, utilities, and maintenance costs that reflect the city's premium cost structure. Energy costs, property management fees, and repair services all command higher prices than in most European cities.
The high cost of living affects affordability calculations and cash flow planning for property investors. Rental income potential must be weighed against these elevated operating costs when evaluating investment returns.
However, the strong local economy and high average incomes in Luxembourg City's financial and EU sectors help support both property values and rental demand despite the expensive living environment.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Luxembourg versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How is expat life and integration in Luxembourg City?
Luxembourg City offers one of Europe's most international living environments, with nearly half the population being foreign-born.
Integration is relatively straightforward due to the established expat communities and international business environment. English is widely spoken in business and social circles, though official paperwork requires French, German, or Luxembourgish language skills.
The city provides robust international schools, healthcare services, and professional networks specifically designed for the international community. Expat social and cultural networks are well-developed, offering numerous opportunities for community engagement and professional networking.
Administrative processes can present language challenges, making local assistance or translation services valuable for property transactions and ongoing bureaucratic requirements. The international nature of the workforce creates a dynamic, multicultural environment that most expats find welcoming.
Professional and social integration typically occurs quickly due to the city's role as a major financial center and EU hub, attracting educated international professionals across multiple industries.
Which areas work best for long-term rentals and what yields can you expect?
Luxembourg City's rental market offers strong demand with yields typically ranging from 3-4% gross in prime locations.
The best areas for long-term rental investment include the city center, Kirchberg, Gasperich, Bonnevoie, and Limpertsberg, all offering proximity to business districts, international schools, and transport connections. These locations attract both expat professionals and local tenants seeking convenient urban living.
Tenants prioritize proximity to transport links, business districts, and international schools, along with modern amenities and energy-efficient properties. Well-maintained apartments with parking, balconies, and updated kitchens command premium rents.
Rental yields can be higher for smaller units or properties in emerging districts, though prime central locations offer more stable, long-term tenant demand. The strong presence of EU institutions, financial services, and international businesses creates consistent rental demand throughout the year.
Property management and maintenance costs must be factored into yield calculations, as Luxembourg City's premium service costs can impact net returns for rental property investors.
It's something we develop in our Luxembourg property pack.
What about short-term rentals - regulations and potential returns?
Short-term rental regulations in Luxembourg City are increasingly restrictive, requiring careful consideration before investment.
Many residential buildings prohibit Airbnb-type short-term lets through building management rules, and city regulations may require registration or limit rental duration. These restrictions vary by district and building type, making due diligence essential before purchasing for short-term rental purposes.
Potential income from short-term rentals can exceed long-term rental yields, but vacancy risk, management costs, and regulatory compliance create additional complexity and expense. Operating costs including cleaning, utilities, and platform fees significantly impact net returns.
The best locations for short-term rentals include the city center, Gare district, Kirchberg, and areas near EU institutions or business districts, targeting business travelers and short-term residents. However, supply restrictions and compliance requirements limit market opportunities.
Professional property management becomes essential for short-term rentals, adding to operational costs while ensuring regulatory compliance and guest service standards. Consider these factors carefully against the potential for higher gross returns when evaluating short-term rental investments.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Luxembourg City's property market in 2025 presents a stabilized environment following the 2024 price correction, creating more favorable conditions for both buyers and investors than the previous peak market period.
The decision to buy depends heavily on your timeline and circumstances, with purchasing favored for residents planning stays over 5 years who can leverage current tax incentives, while the strong rental market offers solid returns for investors targeting business districts and international communities.
Sources
- City of Luxembourg Housing Services
- Immotop Luxembourg Property Listings
- Elle Real Estate Market Analysis 2025
- Immotop Price Analysis Luxembourg
- Luxembourg Chronicle Property Report
- BLLLD Housing Market Analysis
- Luxembourg Legal Property Guide
- AtHome Property Platform
- Expatica Luxembourg Property Guide
- Luxembourg Cost of Living 2025