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Yes, the analysis of Luxembourg City's property market is included in our pack
Thinking of buying a property in Luxembourg City? You're not alone!
Many people are drawn to Luxembourg City's international atmosphere and fantasize about owning a chic apartment or a luxurious penthouse there.
Still, would it be a smart investment? Are property prices increasing in Luxembourg City? Is it expensive? Is it better to invest in Limpertsberg or Kirchberg? And the taxes? Which place will give me the best yields?
We've got it all sorted. No worries.
The Investropa team has extensively researched this market. As a matter of fact, we've put all our findings together in a pack. Get it now.
In the lines below, we'll provide you with helpful information.
How is the real estate market in Luxembourg City?
Is the property market thriving or struggling? We'll find the answers through data analysis.
Types of properties
In Luxembourg City, you can find various types of properties for sale to suit different preferences and needs.
These include apartments, which are individual units within larger buildings, offering options from cozy studios to spacious penthouses.
Houses, both standalone and attached, provide more space and privacy, with options like townhouses and detached villas.
Additionally, there are opportunities to invest in commercial properties, such as offices and retail spaces, if you're interested in business ventures.
Luxembourg City's real estate market offers a diverse range of property types to cater to a wide range of buyers.
Buying or renting?
(If you want to live there yourself and not rent it to others)
If Luxembourg City has captured your heart as your city of choice, you might be considering whether it's better to buy a property or opt for renting in this international financial hub.
Without a doubt, it's better to buy if you want to invest in an asset that could potentially appreciate in value over time.
One data can help you make a decision - the property price-to-rent ratio. This metric tells us how many years of rental income it would take to pay for a property at its current price.
According to Numbeo, the property price-to-rent ratio in Luxembourg City is around 32.97, which is significantly above the world average.
This value shows that it would take you 33 long years of paying rents before you can own a property in Luxembourg City. Renting for such an extended period means you wouldn't be building any equity, and you might end up spending more money without gaining ownership of the property.
Property prices in Luxembourg City
On average, according to the last data from The Statistical Portal of Luxembourg, purchasing a property in Luxembourg City would cost you around $12,650 per square meter.
Clearly, there is a substantial range. The value of a square meter for an apartment in Luxembourg City might differ from a suburban home in Strassen. We actually offer a more in-depth analysis in our pack for buying property in Luxembourg.
To put things in perspective, it is similar to the property prices you can find in the very center of Paris currently.
Also, housing prices in Luxembourg City are way higher (205%) than in Brussels.
The most expensive neighbourhoods in Luxembourg City are probably Merl, Belair, and Limpertsberg, while the cheapest are likely Cents, Hamm, and Bonnevoie.
Trends
First and foremost, we have to acknowledge that Luxembourg is, today, an exceptionally stable country. The last Fragile State Index that has been reported for this place is 20.
This is important to remember when wondering if it's a good investment to buy a property in Luxembourg City.
Also, according to the International Monetary Fund (IMF), Luxembourg's economy is expected to soar by 8.9% in the coming 5 years, resulting in an average GDP growth rate of 1.8%.
If you're about to invest in real estate in Luxembourg City it's a good thing because, as the economy grows, people's incomes (usually) increase, motivating them to invest in real estate, which causes a rise in property demand and prices.
Also, in Luxembourg, the average GDP per capita has changed by 1.2% over the last 5 years. Though not substantial, there is still a positive trend of growth.
This is a strong positive signal: housing prices in Luxembourg City might become more expensive in 2024 and later on.
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Luxembourg right now.
Buying property in Luxembourg City
It can be difficult to buy property in Luxembourg City due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Luxembourg City and in Luxembourg.
Buying process
In our pack, we've laid out all the steps involved in the buying process, including the required documents, taxes to be paid, and guidance on finding properties.
Now, we're giving you a more straightforward version to help you grasp the information more easily.
This is the step-by-step process to purchase a property in Luxembourg City:
- Obtain a "bon de reception" (certificate of eligibility) from the Ministry of Housing if you're a first-time buyer.
- Engage a notary and sign a "compromis de vente" (preliminary sales agreement) with the seller.
- Apply for a mortgage loan, and receive a loan offer from the bank.
- Conduct "urban planning" checks with the municipality to ensure no development plans affect the property.
- Complete the due diligence process, including verifying the seller's title and reviewing the "cadastre" (property register).
- Pay a deposit (usually 10%) to the seller upon signing the "compromis de vente."
- Obtain bank approval for the mortgage and provide a "mainlevée" (mortgage clearance) to the notary.
- Sign the final sales agreement, "acte de vente," with the notary, pay the remaining balance, and applicable "droits d'enregistrement" (transfer taxes).
- Register the property with the "Administration de l'Enregistrement et des Domaines" (Tax Administration).
- Pay the notary fees, property transfer taxes, and mortgage registration fees.
- Receive the keys and take possession of the property after the sale is registered.
- Notify utility providers and local authorities of the ownership transfer and update your address with relevant institutions.
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Luxembourg.
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Where to find a property
If you're on the hunt for properties in Luxembourg City, these websites can be your valuable resources:
- Wortimmo - A local real estate platform in Luxembourg providing options to buy, rent, explore new projects, seek property advice, and access agency listings.
- Property SA - A leading real estate platform in Luxembourg and the Greater Region, offering a comprehensive 49,621 property listings.
- Engel & Volkers - The premier real estate agency in Luxembourg and the Greater Region, presenting an extensive portfolio of over 49,621 listings for buying, selling, and renting properties.
- Felix Giorgetti - A prominent real estate agency in Luxembourg, providing a diverse selection of properties for buying, selling, and renting.
- Sotheby's International Realty - A platform specializing in luxury properties for sale in Luxembourg. Explore a variety of single-family homes and apartments.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Luxembourg.
What properties?
As mentioned before, the average price per sqm in Luxembourg City is $12,650. A 1-bedroom property with 60 square meters would cost approximately $759,000, and a 2-bedroom with 85 square meters would be around $1,075,000.
However, prices will change based on both the property itself and its location.
Prices are higher in the upscale parts of Luxembourg City. A house in Belair could be about $2,390,000, whereas a property in Limpertsberg might be priced at $1,340,000.
Still, some spots are easier on your budget. You may find a house in Cessange for $970,000, or you could discover a house in Kirchberg priced at $800,000.
Find a more detailed breakdown in our full pack for buying property in Luxembourg.
Mistakes to avoid
Here are the main pitfalls when buying a property in Luxembourg City:
- Commune taxes: Property owners must pay local commune taxes, varying between municipalities.
- Inheritance laws: Complex inheritance rules may affect property transfer to heirs and entail legal complications.
- Notary fees: High notary fees, typically 1-3% of the property price, add to the overall purchasing cost.
- Dual agency risks: The absence of exclusive buyer's agents may lead to conflicts of interest.
- Historical building regulations: Properties in designated historical areas might face strict renovation restrictions.
- Mortgage restrictions: Non-residents may encounter limitations and higher interest rates when applying for mortgages.
- Currency fluctuations: If purchasing with a foreign currency, exchange rate changes can impact the property's cost.
- Non-EU restrictions: Non-EU citizens may face additional bureaucratic hurdles and limitations on property acquisitions.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Luxembourg Property Pack
Living in Luxembourg City
Luxembourg City is a vibrant and diverse city with excellent infrastructure, an excellent economy, and a high quality of life, making it an ideal place to buy property.
Cost of living
The cost of living in Luxembourg City is relatively high compared to other European cities, due to its high salaries and strong economy. However, Luxembourg City remains an attractive option for expats due to its low taxes and high quality of life.
Here are some examples to better understand the cost of living in Luxembourg City:
- A glass of Crémant, a sparkling wine produced in Luxembourg: $6-$10.
- Rent for a one-bedroom apartment in the Grund neighborhood: $1,500-$2,500 per month.
- Monthly mKaart public transportation pass for all zones: $50-$100.
- A bottle of Bofferding beer, a popular Luxembourgish brand: $1.50-$2.00.
- Utilities (electricity, heating, cooling) for an 85m² apartment in Luxembourg City: $150-$250.
- A café au lait at a local café: $3-$5.
- Entrance fee to the Luxembourg City History Museum: $10-$15.
- Health insurance coverage for a family of four: $200-$400 per month.
Neighbourhoods
Since we want to share information in a clear and reader-friendly way, we've created a summary table outlining the various neighborhoods in Luxembourg City. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses |
|---|---|---|---|
Belair | Belair is a residential area with beautiful parks and green spaces, offering a high quality of life. | Tranquil environment, close to city center, excellent amenities. | Higher property prices, limited parking options. |
Bonnevoie | Bonnevoie is a diverse neighborhood with a mix of residential and commercial areas, known for its vibrant community and cultural diversity. | Good public transport links, variety of shops and restaurants, lively atmosphere. | Some areas can be crowded, limited green spaces. |
Cents | Cents is a calm residential district characterized by its spacious houses and proximity to nature, offering a peaceful living environment. | Close to Kirchberg business district, well-connected by public transport, green and tranquil surroundings. | Limited shopping and entertainment options, especially compared to city center. |
Clausen | Clausen is a historic neighborhood with narrow streets and picturesque houses, known for its charming ambiance and riverside views. | Scenic and historical charm, vibrant nightlife, cultural attractions. | Limited parking, hilly terrain may be challenging for some. |
Grund | The Grund is a picturesque area nestled below the city's old fortress walls, offering stunning views and a unique atmosphere with its narrow streets and riverside cafes. | Quaint and scenic, historical charm, great for leisure activities. | Limited housing options, hilly terrain may be challenging for some. |
Hollerich | Hollerich is an up-and-coming neighborhood with a mix of residential and industrial areas, attracting young professionals and artists. | Emerging cultural scene, diverse community, relatively affordable housing. | Some parts may still be undergoing redevelopment, traffic congestion. |
Kirchberg | Kirchberg is a modern and bustling district, known for its European institutions, business centers, and shopping facilities. | Hub of economic activity, excellent public transport links, variety of dining and entertainment options. | Lack of green spaces, can be crowded during working hours. |
Limpertsberg | Limpertsberg is a charming neighborhood with a mix of historic architecture and modern facilities, making it popular among families and students. | Close to the University of Luxembourg, vibrant cultural scene, good public transport connections. | Can get noisy due to student population, limited parking availability. |
Merl | Merl is a residential area with a mix of apartments and houses, offering a peaceful environment with easy access to the city center. | Quiet and family-friendly, close to amenities and schools, well-connected by public transport. | Limited nightlife options, fewer cultural attractions. |
Weimerskirch | Weimerskirch is a quiet and green neighborhood with a suburban feel, popular among families and nature lovers. | Tranquil surroundings, plenty of green spaces and parks, good schools. | Less variety in shopping and entertainment, longer commute to city center. |
Life in Luxembourg City
Luxembourg City has a strong economy that is largely based on finance, banking, and insurance. It is also a major hub for the European Union, making it one of the wealthiest cities in the world.
According to the IMF's data, the GDP of Luxembourg City contributes to almost 80% of Luxembourg's GDP. Investing in property in a city with a strong GDP is smart because the city's thriving economy suggests more jobs, higher demand for real estate, and stable property values, making it a favorable investment environment.
What expats usually like the most about Luxembourg City is its international atmosphere and its excellent public transportation system. They also appreciate its many parks and gardens, shopping options, and recreational activities.
Another great point to note is that Luxembourg City is an incredibly safe city, with a crime index of only 28, which is a very impressive score. Luxembourg City's culture of respect and high trust in public institutions has contributed to its low crime rate.
A good point for a property investor - Luxembourg City has an extensive public transportation system, including a modern tram and bus network as well as a light rail rapid transit system.
Access to healthcare in Luxembourg City is more than excellent, with a Healthcare Index of 79. A robust healthcare system always reflects positively on real estate.
Finally, it is worth noting that the University of Luxembourg ranks among the top 250 universities in the world.
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Renting out in Luxembourg City
This section is for you if you want to buy property solely for renting out and earning income.
Long-term
Tenant Profiles in Luxembourg City
According to the data reported by Wikipedia, the home ownership rate in Luxembourg is 71%, which is average.
It means that, if you decide to buy and rent out in Luxembourg City, there will be a good number of people who can become your potential tenants.
If you decide to buy and rent out to long-term tenants, you should target young professionals, expats, and international students, as these are the most common tenant profiles in Luxembourg City. Additionally, there is a large population of retirees who are looking for rental properties.
Here is a little summary table we've made for you.
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in Ville Haute | Professionals, expats | City center, historic charm | $1,200 - $2,500 |
Studio in Kirchberg | Students, young professionals | Business district, modern amenities | $800 - $1,500 |
Apartment in Belair | Families, locals | Residential area, parks | $1,000 - $2,000 |
Studio in Limpertsberg | Students, academics | Near university, cultural vibe | $700 - $1,300 |
Apartment in Hollerich | Youth, professionals | Urban area, transport links | $900 - $1,800 |
House in Cents | Families, expats | Suburban living, space | $1,500 - $3,000 |
Apartment in Bonnevoie | Professionals, commuters | Easy access to city center | $1,000 - $2,000 |
Rental yields
As of today, rental yields in Luxembourg City are floating around 2 or 3%. It's low. A good rental yield is typically considered to be around 7% or higher.
Luxembourg City's best rental yields come from properties in the city center, such as apartments and houses, due to the high demand for rental accommodation in the city center from both foreign and local workers. Luxury properties in the city center also tend to offer high rental yields due to the high demand for high-end accommodation from wealthy expats.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Luxembourg City are taxed at 49%, which is very high.
Short-term
You could also decide to rent short-term to business travelers, as Luxembourg City is a popular destination for conferences and other events. Additionally, students and young professionals may be interested in renting short-term in Luxembourg City, due to its vibrant nightlife and cultural attractions.
If you decide to go with that option, look for properties in the city center, particularly in the Ville Haute and Gare districts, as they offer the most convenient access to public transportation, shops, restaurants, and other attractions. Additionally, the Kirchberg area is a great option for short-term rentals, as it is close to the EU institutions and banks.
There are approximately 690 active Airbnb listings in Luxembourg City, reflecting a dynamic short-term rental market. The average daily rate stands around $151, which is quite high.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Luxembourg City can make around $2200 per month. Also, the average occupancy rate is estimated at 80%.
Is it worth buying real estate in Luxembourg City then?
Buying a property in Luxembourg City is a solid choice if you're in it for the long haul. This city boasts a stable and growing economy, low crime rates, and a high trust in public institutions.
These factors contribute to a safe and attractive living environment, making property values likely to appreciate over time. Plus, if you plan to live in the property yourself, buying is financially smart because the property price-to-rent ratio is high, meaning renting for an extended period may just bleed your wallet without any equity gain.
So, owning a property here lets you build wealth and enjoy the perks of a growing economy.
However, it's not all sunshine and roses. Luxembourg City's property market isn't for everyone. It's pricey, with an average cost per square meter similar to Paris.
So, if you're on a tight budget or want short-term flexibility, renting is the way to go. Plus, buying comes with a heap of extra costs and complexities, like notary fees, property registration taxes, and potential currency fluctuations if you're using a foreign currency.
Moreover, if you're not keen on dealing with local commune taxes or complex inheritance laws, renting might save you some legal headaches. In a nutshell, if you're in for the long haul, buying a property in Luxembourg City is a smart investment. But if you're after short-term flexibility or cost-effectiveness, renting is the more practical choice.
Make sure you understand the real estate market in Luxembourg City
Don't rush into buying the wrong property in Luxembourg. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.