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What is happening in Luxembourg’s real estate market? Are prices continuing their upward trajectory, or is there a shift on the horizon? Is Luxembourg City still the prime destination for international investors? How are government policies and taxes shaping the real estate landscape in 2025?
These are the questions we hear every day from industry professionals, potential buyers, and sellers, from Esch-sur-Alzette to Differdange and beyond. Perhaps you’re curious about these trends too.
We know this because we maintain close connections with local experts and individuals like you, exploring the Luxembourg real estate market daily. That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we missed something or could improve, we’d love to hear your feedback. Feel free to message us with your thoughts, and we’ll strive to enhance this content for you.
1) Luxembourg’s property prices will keep rising, but more slowly than in past years
The residential property market in Luxembourg has been on a rollercoaster ride in recent years.
Back in 2019, house prices jumped by 9% and new apartments surged by 12.4%. Fast forward to 2023, and things have cooled off a bit. The average price per square meter for existing apartments actually dropped by about 7.4% from the previous year. This shift is largely due to rising interest rates, which have made mortgages pricier and less accessible for many potential buyers.
As we moved into 2024, the trend of slower growth continued. The average price per square meter is still climbing, but at a more relaxed pace. Despite this, the demand for housing remains strong, driven by demographic factors. However, the supply hasn't kept up, leading to a persistent shortage in the market.
Economic forecasts are also playing a role here. With predictions of slower economic growth, the housing market is expected to stabilize. The government is stepping in with public investments and policy changes aimed at increasing housing supply, which should help balance things out.
So, while property prices in Luxembourg are expected to keep rising, the pace will be slower than in previous years. This is good news for buyers who might have been priced out of the market during the rapid increases of the past.
For those considering buying property in Luxembourg, it's important to keep an eye on these trends. The market is still competitive, but the slower growth might offer some breathing room. Just remember, the demand is still there, and the supply is still tight, so it's a balancing act.
Sources: Global Property Guide, European Commission, IMF, Delano, Just Arrived
2) Foreign buyers will increasingly target Luxembourg's real estate for its stable economy
Foreign buyers are eyeing Luxembourg's real estate market because of its stable economy.
Luxembourg boasts a high GDP per capita and impressively low unemployment rates, which are key indicators of its economic strength. This stability translates into strong consumer confidence, making people more willing to invest in property. The country's economic resilience, even when growth slowed a bit in 2023, keeps it attractive for those looking for secure investments.
Luxembourg's strategic position in Europe is a magnet for international companies, leading to a steady influx of foreign direct investment. This not only boosts the economy but also fuels demand for both commercial and residential properties. The presence of multinational corporations and high-net-worth individuals further drives the market, especially for high-end real estate.
Luxembourg's favorable tax policies and business-friendly environment are significant draws for investors. These factors make it a prime location for establishing headquarters, which in turn increases the demand for real estate. Surveys and reports consistently rank Luxembourg as a top destination for real estate investment, reflecting the confidence of foreign investors in the market.
In the real estate world, Luxembourg is often highlighted for its robust economic performance compared to other European countries. This consistent performance makes it a safe bet for those looking to invest in property. The country's appeal is further enhanced by its strategic location and business-friendly policies.
With its strong economy and strategic advantages, Luxembourg continues to be a hotspot for real estate investment. The combination of economic stability, strategic location, and favorable policies makes it an attractive option for foreign buyers looking for secure and profitable investments.
Sources: Statista, Trading Economics, PwC Luxembourg
From this video, we realize that Luxembourg continues to attract institutional investors and fund managers, indicating sustained foreign investment interest due to the country's stable economy.
3) Suburban rental yields will drop as more people choose city living to be near work
In Luxembourg, more people are choosing city life over suburban living.
Urban areas are seeing a steady rise in population, with growth rates of 2.59% in 2023 and 2.27% in 2022. This shift indicates a strong preference for city centers, where everything is within reach, from work to entertainment. The convenience of having amenities close by is a big draw for many.
City-center housing is in high demand, and it's no surprise that rents in these areas have increased by 1.6%. Meanwhile, suburban house rents have taken a hit, dropping by 9.8%. This shows that people are willing to pay a premium for the perks of urban living, like shorter commutes and vibrant city life.
Speaking of commutes, the desire to live closer to work is a major factor in this trend. In the North region, for example, flat rents have jumped by 6.0%, while house rents have dipped slightly by 1.0%. This pattern highlights the growing appeal of urban areas, where getting to work is quicker and easier.
As more people flock to city centers, suburban rental yields are likely to decline. The convenience and lifestyle offered by urban living are hard to resist, making city centers the preferred choice for many. This shift is reshaping the rental market, with city-center properties becoming increasingly sought after.
Sources: Urban Population Growth, Rental Market Trends
4) Updated property tax laws will shift investment strategies for local buyers
In Luxembourg, upcoming changes in property tax laws are set to reshape how locals invest in real estate.
With the government planning to reform property taxes by late 2024, there's a buzz about how this will affect the market. One major change is the new levy on empty properties starting in early 2025, which aims to discourage investors from leaving homes vacant. This move is expected to make investors rethink their strategies, focusing more on properties that are likely to be occupied.
Real estate agencies are already seeing shifts. The increase in tax credits for registration and transcription duties from EUR 30,000 to EUR 40,000 per buyer is making primary residences more attractive. This change is a direct response to the anticipated tax reforms, nudging buyers towards homes they plan to live in rather than leave empty.
The government's push doesn't stop there. They're also working on a national register to track occupied and unoccupied homes, further emphasizing the need to reduce vacant properties. This initiative is part of a broader strategy to ensure that homes are being used effectively, aligning with the new tax policies.
Experts are weighing in too. The IMF report points out that rising borrowing costs and market uncertainties are already affecting housing demand, including for buy-to-let properties. This suggests that investors might pivot towards properties with higher occupancy rates, like primary residences or rentals, to ensure steady returns.
These changes are not just about taxes; they're about reshaping the real estate landscape in Luxembourg. As the market adjusts, local buyers will need to adapt their strategies, focusing on properties that align with the new tax environment.
Sources: Delano, Chambers, IMF eLibrary
5) Interest in properties with leisure amenities will grow due to a focus on work-life balance
Luxembourg tops Europe for work-life balance in 2023, thanks to its generous policies and high wages.
With 76% of workers able to work from home, remote work is a big deal here. This means people are spending more time at home, making properties with leisure amenities like gyms and pools super attractive. Imagine enjoying a swim or workout without leaving your building!
People are really into this flexible work style. A LinkedIn survey shows 59% prefer a hybrid work model, which means homes with fun features are a hit. Employees want to mix work and play, and these properties make it easy.
Developers are catching on, too. There's a boom in residential projects that include leisure amenities. These features are all about promoting a healthy work-life balance, which is becoming a big deal for everyone.
Sources: Research Luxembourg, Moovijob, IMF eLibrary
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6) Demand for accessible, single-story homes will rise due to an aging population
In recent years, Luxembourg's population has been getting older, especially in 2023 and 2024.
With more people in the 40-64 and over 80 age brackets, there's a growing need for homes that cater to their needs. These age groups often look for living spaces that are easier to manage as they age.
Luxembourg boasts a life expectancy of about 83 years, which is higher than the EU average. As people live longer, they often encounter mobility issues, making single-story homes a practical choice since they eliminate the hassle of stairs.
Many seniors in Luxembourg deal with multiple chronic health conditions, according to healthcare studies. This makes accessible homes even more crucial, as they can better accommodate these health challenges.
Single-story homes are particularly appealing because they offer ease of access, which is essential for older adults who might struggle with stairs or other barriers in multi-level homes.
Sources: Statistiques Luxembourg, OECD Better Life Index, State of Health in Luxembourg 2023
7) The expanding expat community will increase demand for international schools and family-friendly areas
Luxembourg is becoming a hotspot for expatriates, with thousands moving there each year.
In 2022 alone, over 19,000 new expatriates arrived, and this trend is expected to continue. This influx is not just a number; it’s reshaping the community and creating a vibrant, multicultural environment. As more people from countries like the USA, France, and Italy settle in, they bring diverse cultures and needs.
One of the most noticeable impacts is on education. The International School of Luxembourg (ISL) is a prime example, with over 1,300 students from 57 different nationalities. This school is a hub for expatriate families, offering a curriculum that caters to their unique requirements. As the expatriate population grows, the demand for such international schools is set to rise, making them a crucial part of the community.
Expatriate families are also on the lookout for family-friendly neighborhoods. They prefer areas with good schools, parks, and community facilities, which is evident in the real estate market. Properties in these areas are highly sought after, reflecting the priorities of these new residents. This trend is shaping the housing market, with a noticeable demand for homes in family-oriented locales.
According to data from the National Statistics Office (STATEC) and media reports, these preferences are not just trends but are becoming a defining feature of Luxembourg’s real estate landscape. The growing expatriate community is not only boosting demand for international schools but also transforming neighborhoods into vibrant, family-friendly spaces.
Sources: Government Data and Media Coverage, International School Enrollment
8) Virtual reality tours will become standard in property listings, appealing to tech-savvy buyers
Virtual reality tours are now a must-have in property listings, especially for tech enthusiasts.
Back in 2023 and 2024, we saw a big jump in the use of VR in real estate. This was because people wanted more engaging and efficient ways to view properties. VR tours made it easy to check out homes without leaving your couch, saving time for everyone involved.
Take Luxembourg, for example. With 99.0% of its population online by early 2024, it's no wonder they quickly embraced VR. Surveys showed that over half of the adults there had already tried a virtual tour, and 67% of home buyers wanted VR tours when looking at properties.
Real estate agencies jumped on this trend, making virtual tours a big part of their marketing. As VR tech got cheaper, it became more accessible for real estate pros. The media also highlighted how VR was changing the game, which only sped up its adoption.
Sources: DataReportal, PhotoUp, Proprli
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.
9) The Cloche d'Or area will attract more buyers with new shopping and leisure facilities
The Cloche d'Or area is becoming a hot spot thanks to new shopping and leisure facilities.
In recent years, a massive 75,000 sqm shopping center with over 120 boutiques and local stores has started to take shape, boosting property values significantly. These amenities naturally attract more residents and businesses, making the area more desirable.
By 2035, the Cloche d'Or project aims to accommodate around 45,000 people, signaling a big rise in demand for homes. Modern interiors, high-end finishes, and sunlit communal areas make it a very appealing place to live. The shopping center's design, with its light-filled and green spaces, is expected to draw high foot traffic and increase consumer spending.
Young urban professionals are particularly drawn to the modern amenities being developed here. They often prioritize living in areas with easy access to shopping centers, restaurants, and leisure facilities, which further drives up demand for homes.
Case studies from other cities show that similar developments can lead to significant increases in property values due to the enhanced desirability of the area. This trend is evident in Cloche d'Or, where the new facilities are making the area more attractive.
Sources: Nextensa, Evendo, VDL Mobility Plan
10) Gasperich will attract investors with its strategic location and new infrastructure
Gasperich is quickly becoming a prime spot for investors, thanks to its strategic location and new infrastructure.
In recent years, property prices in Gasperich have surged, with the average price per square meter hitting €12,017 in October 2023. This rise mirrors the trend in Luxembourg City, showing a clear uptick in demand for real estate here. The Cloche d'Or development has been a game-changer, turning Gasperich into a bustling business hub. This project has drawn in major companies, boosting economic activity and bringing in nearly 37,000 employees and 25,000 daily visitors.
Public transport is getting a major upgrade with new tram lines set to roll out in 2024, making Gasperich even more accessible. This improvement is expected to make the area more attractive to investors. Gasperich's location is a big draw, sitting close to major business districts and the financial center. It's no wonder multinational companies like PWC, Deloitte, and Alter Domus have set up shop here.
These firms are attracting a crowd with high purchasing power, particularly young professionals. This influx is driving up demand for rental properties, giving the real estate market a significant boost. The area is buzzing with potential, and the new infrastructure is only adding to its appeal. With the ongoing developments, Gasperich is poised to become a hotspot for investors looking to tap into a thriving market.
Sources: Gasperich Cloche d'Or, Luxembourg's Booming District, ANNUAL REPORT - Nextensa, Gasperich: An Urban Green Oasis with Corporate Buzz
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.