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What will happen in Luxembourg’s real estate market? Will prices rise or fall? Is Luxembourg City still a prime location for international investors? How is Luxembourg’s government shaping real estate policies and taxes in 2025?
We’re frequently asked these questions because we’re deeply engaged in this market. Through our collaborations with notaries, real estate agents, and clients purchasing properties in Luxembourg, we’ve gathered firsthand insights.
That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive perspective on market predictions and forecasts.
Our aim is straightforward: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property prices in Luxembourg City will rise moderately because land is scarce
Luxembourg City is grappling with limited land availability, which is pushing property prices up.
Back in 2022, the city had just 5,718 hectares of buildable land, with 4,294 hectares earmarked for homes. This scarcity, coupled with local developers holding much of the land, means new plots for housing are rare. From 2010 to 2021, land prices in the city nearly doubled, rising by an average of 8.1% annually. This surge outpaced the increase in prices for existing homes or those under construction, highlighting that land costs are a major driver of housing price hikes.
In 2023, a government report emphasized that land prices were a key factor in the rising cost of homes, especially in upscale areas where land constitutes a significant portion of the total home price. Adding to the pressure, Luxembourg City has welcomed nearly 100,000 new residents over the past decade. This boom is largely due to the city's thriving economy and its status as a financial hub, attracting job seekers and those seeking a high standard of living.
This influx has further increased the demand for housing, pushing prices even higher. The limited land and growing population create a perfect storm for property prices to continue their upward trend. If you're considering buying property here, be prepared for a competitive market where land scarcity plays a crucial role in pricing.
Sources: Delano.lu, Justarrived.lu, Statec
2) Property prices in the southern regions will rise significantly due to cross-border demand
The southern regions of Luxembourg are seeing a significant rise in property prices.
By the end of 2023, the average asking price per square meter in these areas was €6,981. While this is lower than the national average, it clearly shows an upward trend, indicating a growing demand for homes. This surge is largely driven by the influx of cross-border workers, especially from France.
Since 1990, the number of French workers commuting to Luxembourg has quadrupled, reaching over 70,300. Many of these workers prefer to live closer to their jobs, naturally increasing the demand for housing in the southern regions. This trend is particularly noticeable in areas like Esch-sur-Alzette, where proximity to the border makes it a popular choice.
Reports from STATEC reveal that French workers are the largest group of cross-border commuters. This supports the idea that there's a growing need for housing in southern Luxembourg, which is pushing property prices up. The demand is so high that some areas are seeing properties sell almost as soon as they hit the market.
Although specific data on housing shortages isn't available, the combination of rising prices and increased demand suggests that the supply of housing may not be keeping up. This is creating a competitive market where buyers need to act quickly.
For those considering buying property in these regions, it's essential to understand that cross-border demand is a key factor driving prices. This trend is expected to continue, making it a potentially lucrative investment.
Sources: Delano, RTL Today, Espaces Transfrontaliers
We have made this infographic to give you a quick and clear snapshot of the property market in Luxembourg. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Foreign buyer interest in Kirchberg will drop as prices become too high
The Kirchberg district in Luxembourg is experiencing a property price boom, with the cost per square meter now at €8,050.
This surge in prices is largely due to limited housing stock and a strong demand for prime locations in the city center. As a result, many potential buyers, especially those from abroad, are finding it increasingly difficult to afford properties here.
Foreign buyers are particularly affected, as the high prices are becoming a significant barrier. Many are choosing to wait and see how the market evolves, especially given the current global economic and geopolitical uncertainties.
In 2023, there was a noticeable drop in foreign property investments, with apartment transactions in Luxembourg falling by 44.6%. This decline highlights the growing challenge for foreign buyers in the market.
Real estate agents and industry experts have observed that the steep property prices are a major deterrent for those looking to invest from abroad. The Kirchberg district, once a hotspot for foreign buyers, is now seeing a shift in interest due to these prohibitive costs.
As prices continue to rise, the trend suggests that foreign buyer interest in Kirchberg will likely decline, making it a less attractive option for international investors.
Sources: Global Property Guide, Engel & Völkers
4) Rents in Luxembourg City will continue to rise because demand is high and supply is limited
Rents in Luxembourg City are climbing and will likely keep going up due to high demand and limited supply.
Luxembourg City is bustling with a growing population, largely because of high immigration rates. As of 2023, a whopping 72.7% of the city's residents were immigrants, making it one of Europe's most diverse spots. Many newcomers hail from nearby countries like France, Belgium, and Germany, which has significantly boosted the demand for housing.
The city is a magnet for expatriates and international workers, thanks to its status as a major hub for international finance and business. By early 2023, there were 313,400 foreigners living in Luxembourg, with sizable communities of Portuguese, French, Italians, Belgians, and Germans. These professionals are on the hunt for housing, further driving up demand.
On the flip side, the supply of housing is tight. Luxembourg City's geography and urban planning constraints limit the land available for new developments. Add in high construction costs, and it's tough to boost the housing stock. This limited supply is a key factor in the upward pressure on rents.
Government reports and national statistics consistently point to a housing shortage in the city. In the first quarter of 2023, the average advertised rent for apartments was €1,724 per month, with low vacancy rates showing just how tight the market is. When demand outpaces supply, rents naturally rise.
Sources: Global Property Guide, Statistiques Public, EURES, IMF eLibrary
5) Demand for rental properties in Luxembourg City will grow as more international workers move in
Luxembourg City is seeing a surge in demand for rental properties due to an influx of international workers.
With more than 60 financial firms setting up shop in Luxembourg, the city is becoming a major EU hub. This means more jobs and more people looking for places to live. The city is not just about finance; it's a melting pot of cultures with a growing expatriate community. As of early 2023, Luxembourg's population was around 660,800, with nearly half being foreigners, mainly from Portugal, France, Italy, Belgium, and Germany.
The tech and finance sectors are booming, attracting talent from all over the world. Luxembourg is committed to the EU's Capital Markets Union and excels in wealth management and alternative investments. This makes it a magnet for international workers. By the third quarter of 2023, the labor market had over 480,000 employees, including 226,000 cross-border workers.
For those considering buying property, this influx of international workers is a key factor. The demand for rental properties is not just a trend; it's a reflection of Luxembourg's growing importance in Europe. The city offers a unique blend of career opportunities and cultural diversity, making it an attractive place to live and work.
Luxembourg's real estate market is adapting to these changes. The demand for rental properties is expected to continue rising as more international companies and workers flock to the city. This is a golden opportunity for property investors looking to tap into a thriving market.
Whether you're looking to invest or find a new home, understanding the dynamics of Luxembourg's property market is crucial. The city's appeal is not just in its economic opportunities but also in its vibrant international community.
Sources: EURES, Luxembourg for Finance, Luxembourg Public, Management Mobility, ADEM
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6) Yields in the north will drop as property prices rise faster than rents
In northern Luxembourg, property prices are climbing steadily.
As of September 2024, the average price for a home was €6,009 per square meter. This is a bit lower than last year, but still quite high. If you're looking at Diekirch, expect to pay the most, with prices around €6,752 per square meter. On the other hand, Wiltz offers a more budget-friendly option at €5,270 per square meter.
Rents are also going up, but not as quickly. In September 2024, the average rent was €18.19 per month per square meter, which is a 4.54% increase from the previous year. This slower rent growth compared to property prices means that rental yields, or the returns landlords get from renting out their properties, might start to shrink.
Looking at other places, when property prices outpace rent, yields usually drop. Take the United States, for example. There, the multifamily market saw rent growth slow down because of too many new buildings, which led to declining yields.
In Luxembourg, this trend is particularly noticeable in the northern regions, where property prices are rising faster than rents. This could mean that yields will decline as property prices continue to outpace rent growth.
Sources: Immotop, RTL Luxembourg, YouTube
7) Property prices in northern Luxembourg will stay stable as supply and demand are balanced
The northern regions of Luxembourg have seen remarkable stability in property prices over the past few years.
In 2024, the North recorded a tiny drop of just -0.6% in property prices during the second quarter, showing more stability compared to other areas. This suggests a well-balanced market, unlike regions with more dramatic price swings.
New housing developments in the North are keeping pace with demand, which helps maintain stable prices. Even as housing transactions pick up, the North remains resilient with minimal price changes, indicating a healthy balance between supply and demand.
Interestingly, there are no major shifts in population growth or migration in the North that could disrupt this balance. The steady population growth in Luxembourg supports a consistent demand for housing, reinforcing the North's stable market conditions.
Local insights reveal that the North's charm lies in its scenic landscapes and peaceful lifestyle, attracting buyers who value tranquility over urban hustle. This unique appeal contributes to the region's stable property market.
For potential buyers, the North offers a reliable investment opportunity with its balanced market and appealing living conditions. It's a region where you can expect steady property values without the volatility seen elsewhere.
Sources: Athome.lu, Statistiques Public, IMF eLibrary
8) Rental yields in Luxembourg City will rise as demand for rentals stays strong
Rental yields in Luxembourg City are on the rise, driven by several key factors.
In early 2023, average apartment rents jumped by 11.6%, reaching €1,724 monthly. This surge highlights a strong demand for rentals, naturally boosting yields. With more people opting to rent due to rising interest rates, the city's rental market is bustling. The limited land for new housing keeps supply tight, especially in prime spots, pushing prices and yields even higher.
Luxembourg City is a magnet for international companies and EU institutions, drawing in a large number of expatriates and international workers. This influx is a major driver of rental demand, pushing prices and yields upward. The low vacancy rates in rental properties further underscore the strong demand for housing, reinforcing the trend of increasing rental yields.
With its vibrant international community, Luxembourg City offers a unique living experience. The city's appeal to expatriates and international workers is undeniable, making it a hotspot for rental demand. This demographic shift is a significant factor in the rising rental yields, as more people seek housing in this dynamic city.
As the city continues to grow, the demand for rental properties shows no signs of slowing down. The combination of a thriving job market, limited housing supply, and a diverse population creates a perfect storm for increasing rental yields. Investors looking to capitalize on this trend will find Luxembourg City an attractive option.
Sources: Global Property Guide, Management Mobility, Nextimmo
We made this infographic to show you how property prices in Luxembourg compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Older property costs will rise due to new environmental regulations requiring upgrades
Buying a property in the countryside might come with hidden costs due to new environmental regulations.
These rules aim to boost energy efficiency and cut carbon emissions, but they often mean older homes need pricey upgrades. For instance, Luxembourg's Klimabonus scheme offers subsidies for energy renovations, but you can only get it once per construction element, making multiple upgrades costly.
Looking back, the 2008 Energy Efficiency Ordinance is a good example of how regulations can hike up renovation costs. It pushed for higher energy performance, and since 2017, all new buildings must be nearly zero-energy. This means older homes need expensive updates to keep up.
Older properties are usually not energy efficient, as highlighted in Luxembourg's Third National Energy Efficiency Action Plan. This plan expects big energy savings from residential buildings, which means more upgrades for older homes.
Real-life examples show that properties using the Klimabonus scheme need significant investments to meet new standards. These upgrades often involve costly renewable energy installations.
Experts say there's a growing demand for energy-efficient retrofitting services, driven by the need to comply with new regulations. This demand is pushing up the costs of upgrading older properties.
Sources: Klimabonus Scheme, Odyssee-Mure, National Energy Efficiency Action Plan
10) Property prices in the Grund neighborhood will fall because of higher flood risks
The Grund neighborhood in Luxembourg is facing increasing flood risks, which could negatively impact property prices.
Back in 2021, Luxembourg saw severe flooding, setting a new national record for rainfall. This event put a spotlight on the vulnerability of areas like Grund to such natural disasters. Historically, Grund has been prone to flooding, leading to the installation of metal barriers to try and reduce future risks. However, despite these efforts, the area remains at high risk, as government warnings and urban planning documents suggest.
These documents likely identify Grund as a high-risk flood zone, reflecting ongoing concerns about its susceptibility to flooding. Insurance companies have taken note, raising premiums or even refusing coverage for properties in flood-prone areas like Grund. This makes it more expensive and challenging for homeowners to protect their investments, further discouraging potential buyers.
Additionally, real estate market analyses have shown a correlation between flood risk and property value decline. This suggests that environmental concerns are increasingly influencing buyer decisions. The increased flood risk in Grund is not just a local issue; it's part of a broader trend affecting property markets in flood-prone areas.
For potential buyers, this means weighing the risks and costs associated with purchasing property in Grund. The neighborhood's charm and historical significance might be overshadowed by the financial implications of flood risks. As a result, some buyers might look elsewhere, where the risks are lower and insurance is more affordable.
Sources: PreventionWeb, PwC, RTL Today
11) Rural rents will stay steady as demand and supply are balanced
Rents in rural Luxembourg are expected to stay stable because housing demand matches what's available.
One reason for this stability is the low population growth in rural areas. In 2023, only 7.92% of the population lived in these regions, a slight drop from 8.12% in 2022. This means not many people are moving to the countryside, keeping housing demand steady.
Government initiatives like "Village Development" and the European LEADER Initiative are key players here. They focus on balanced housing development by involving locals in community projects. This approach prevents overbuilding and keeps the supply and demand in check.
Rural areas aren't seeing a boom in industries that would draw in large numbers of people. Instead, there's a focus on agricultural diversification and tourism, which supports a stable local economy without causing a housing rush.
Another factor is the absence of significant migration trends towards rural areas. The percentage of people living in these areas has been declining, reinforcing the stability in housing demand.
Sources: The Global Economy, Ministry of Agriculture, Luxembourg
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12) Rents in the southern regions will rise moderately as cross-border workers look for housing
Rents in southern Luxembourg are on the rise as more cross-border workers look for homes.
In early 2024, Luxembourg had 522,650 jobs, with 231,290 of those filled by cross-border commuters. This steady influx of workers has been a key factor in the rental market, even though the growth rate has slowed since the pandemic.
The demand for rental properties in southern Luxembourg is high, largely due to these cross-border workers. Unfortunately, the supply isn't keeping up, leading to a noticeable housing shortage. Despite new construction projects, the real estate market in these areas struggles to meet the demand.
Looking back, we see a pattern: rent hikes often follow population increases. In mid-2023, rents in southern and eastern Luxembourg jumped by 11.0% as more workers moved in. This trend is likely to persist, with more people wanting to live near their jobs.
As more workers seek housing close to their workplaces, rental demand continues to climb. This ongoing demand is expected to keep pushing rents up, especially in areas popular with cross-border commuters.
Sources: Delano, Just Arrived, Delano
13) Demand for homes near international schools will rise as the expat community grows
The expatriate community in Luxembourg is growing rapidly.
In 2022, Luxembourg welcomed 19,238 new arrivals, many of whom were third-country nationals. This influx has naturally led to a higher demand for services that cater to expatriates, especially international schools.
Take the International School of Luxembourg, for example. It boasts a student body of over 1,300 students from 57 different nationalities. This diversity shows the need for schools offering international curricula, catering to various cultural backgrounds. The European Public Schools also saw a 31.7% increase in enrollment from 2021/22 to 2022/23, highlighting this demand.
Expatriates often prefer living near these schools for convenience, which has naturally increased the demand for housing in these areas. While specific real estate reports aren't cited, the trend is clear from the growing number of expatriates and their housing preferences. Real estate agents and development plans for new residential areas targeting expatriates support this observation.
Sources: International School of Luxembourg, Migrant Integration in Luxembourg, European Public Schools in Luxembourg
14) Demand for homes with office spaces will grow as remote work becomes more common
In Luxembourg, remote work is reshaping the housing market.
Even though the number of people working from home dropped from 40% in 2021 to 30% in 2023, 57% still want to work from home at least once a week. This shows a strong desire for flexible work options, which is influencing what people look for in a home.
The "Quality of Work" survey found that 32% of employees prefer to work remotely most or all of the time. This has led to a growing interest in homes with dedicated office spaces, as more people want a comfortable and efficient work-from-home setup.
Real estate agents are noticing that buyers are prioritizing homes with office spaces. This shift reflects the changing needs of those who are embracing remote work, making such homes more appealing in the current market.
The home office furniture market in Luxembourg is expected to grow by 1.24% from 2024 to 2029, indicating a rising demand for home office setups. This trend supports the need for homes with dedicated office spaces, as people invest in creating a productive work environment at home.
As remote work becomes more common, homes with office spaces are becoming a top priority for buyers. This change is driven by the desire for a better work-life balance and the convenience of working from home.
Sources: RTL Today, Statista, NordLayer, Delano
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Luxembourg. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
15) More foreign buyers will be drawn to Belair for its upscale amenities
Belair in Luxembourg is catching the eye of foreign buyers thanks to its luxurious amenities.
Property prices in Belair are on the rise, largely due to the interest from luxury buyers. In early 2023, the number of approved residential building permits jumped by 39.3%, with projects like the Nook leading the way. This surge highlights the area's appeal to those seeking upscale living.
The Nook project stands out as a beacon of luxury in Belair. Its design, featuring limestone, glass, and aluminum, offers stunning open views from its corner plot. These high-end features are exactly what affluent expatriates are after, making it a magnet for foreign buyers.
Belair's appeal is further enhanced by its international schools, such as OTR International School and the International School of Luxembourg. These institutions are a big draw for expatriates, providing quality education options for their children and fostering a sense of community. This educational infrastructure is a key factor in attracting foreign families.
The upscale vibe of Belair is not just about housing; it's also about lifestyle. The area is expanding its luxury retail and dining options, catering to its affluent residents and visitors. This development is a testament to Belair's growing reputation as a premium destination for those seeking a high-end lifestyle.
With its combination of luxury housing, international schools, and upscale amenities, Belair is poised to continue attracting foreign buyers. The neighborhood's transformation into a hub of luxury living is evident, making it a top choice for those looking to invest in a premium property.
Sources: Luxembourg Residential Real Estate Market Analysis 2024, Nook - Belair, Luxembourg - Solum Real Estate, International education in Luxembourg, private and public
16) Demand for eco-friendly homes will grow as people become more environmentally conscious
Eco-friendly homes are gaining traction as people become more environmentally conscious.
In Luxembourg, the number of approved permits for eco-friendly residential buildings jumped by 39.3% in 2023 and 2024. This trend is even more striking in Luxembourg City, where permits surged by nearly 120%. The city is becoming a hub for sustainable living, attracting both developers and buyers interested in green architecture.
People are opting for sustainable building materials, which are now trusted by architects and developers worldwide. This shift is particularly evident among millennials, who are leading the charge in eco-friendly purchases. They are not just talking about sustainability; they are actively making choices that reflect their values.
The Luxembourg Government is also stepping up with the Housing Pact 2.0, a plan to boost affordable and sustainable housing. This initiative is designed to meet the growing demand for eco-friendly homes by improving residential quality and ensuring space for affordable housing. It's a win-win for both the environment and the community.
Media coverage is playing a crucial role in this shift, highlighting the benefits of eco-friendly homes and sparking public interest. As more people learn about the advantages, the demand for these homes is expected to rise even further.
With environmental awareness on the rise, eco-friendly homes are set to become even more popular. The combination of government support, media attention, and consumer demand is creating a perfect storm for sustainable living.
Sources: The Madrona Group, Global Property Guide, FRONT Sustainable Building Materials
17) Sustainability will drive property buying choices in Luxembourg
Sustainability is now a major factor when buying property in Luxembourg.
In 2023, the Luxembourg government rolled out the LENOZ certification to boost sustainable housing. This move wasn't just about labels; it came with financial aid for building owners, showing the government's serious commitment to eco-friendly practices. The idea was to make the property market more transparent and encourage sustainable choices.
People in Luxembourg are increasingly looking for homes that are kind to the planet. With 80% of homes needing energy upgrades, there's a big push for eco-friendly living spaces. Banks like BGL BNP Paribas are jumping on board, offering climate loans to help folks make their homes more energy-efficient. This shows a real shift towards sustainable development in the housing market.
Real estate is also catching the green wave. The Housing Pact 2.0 reform is a game-changer, pushing for energy-efficient buildings and giving municipalities a nudge to create more affordable housing. This reform is a clear sign that the market is moving towards sustainability-focused developments, meeting the growing demand for energy-efficient homes.
Financial products are evolving too. Green mortgages, like the Mutuo Green mortgage from BNL BNP Paribas, are becoming more common. These products offer financial perks for energy-efficient buildings, making eco-friendly properties even more attractive to buyers. It's a win-win for both the environment and the wallet.
Sources: Baker McKenzie, BNP Paribas, European Commission, Guichet.lu
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18) Blockchain will make property transactions cheaper and more transparent by streamlining the process
Blockchain technology is changing how we buy and sell property, making everything faster and clearer.
In 2024, Luxembourg made a big move with the Blockchain Law IV, pushing blockchain into the financial world. This law lets people use digital securities and smart contracts, which means fewer middlemen and smoother transactions.
Globally, using blockchain can cut real estate costs by up to 30%, according to Deloitte. This happens because blockchain gets rid of unnecessary steps and automates what used to be slow, manual work. In Sweden, a test showed that blockchain can shrink the time for real estate deals from months to just days, making it a win-win for buyers and sellers.
Blockchain also slashes the risk of property fraud by keeping a permanent record of all transactions. In places where property fraud is common, this tech can cut fraud by up to 50%, saving as much as $160 billion each year. In Baltimore, officials are using blockchain to speed up property title processes, reducing fraud and making transactions quicker.
Imagine buying a house without the usual headaches. Blockchain makes it possible by offering a transparent and efficient system. This is especially useful in areas with high fraud rates, where blockchain can make a real difference.
In Baltimore, blockchain is already helping to streamline property title recordation, which not only reduces title fraud but also speeds up real estate transactions, making the process smoother for everyone involved.
Sources: CoinTrust, Savvycom Software, Route Fifty
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.