Real estate market and prices: what to expect?

Advertised prices are now higher than in major European cities. It has to be said that the country is suffering from a housing shortage in the face of constant population growth.

Characteristics of the Luxembourg real estate market

Insufficient real estate supply compared to demand

The Luxembourg real estate market is clearly marked by an insufficiency of supply compared to demand.

On the ground, we note the permanent presence of construction sites of collective buildings or individual houses. Nevertheless, the appearance and development of new districts (Cloche d’Or, Kirchberg, Belval, …) is not enough to meet the demand for buying or renting real estate.

Supply remains insufficient to meet the influx of demand. And this growth in demand is not about to stop, as the population continues to grow significantly. New workers continue to arrive, attracted by great career prospects and compensation,

Statec still reports a need for 5,600 to 7,500 additional housing units per year. However, the real estate market seems to have paused since late 2022.

After several years of soaring prices, the real estate market is slowing down

The Luxembourg real estate market has seen a price surge from 2019. The European Commission estimated this overvaluation of real estate, up to +28%. In the recent period since 2010, housing prices have increased by +56%. Over the same period, the median income increased by only +35%.

If we take 2005 real estate prices as a base of 100, they have been multiplied in 2021 by :

• 2.6 for home sales, all municipalities and all properties combined
• 3.0 for apartment sales
• 1.6 for house rentals
• 1.7 for apartment rentals.

See the cost of housing in the household budget.

Faced with a market that is considered overvalued and on the verge of overheating, the government and municipalities have taken steps to create more housing. From 2023, the tax burden will be increased on building land and empty homes, with a significant rise in property taxes.

Real estate prices increased by more than 10% in 2019, 2020 and 2021. But since the end of 2022, there has been a slowdown with “only 9.6%” growth over the year. The 4th quarter of 2022 and the 1st quarter of 2023 even show a decrease in prices. See the latest real estate trends here.

Average prices announced in Luxembourg at the end of 2022

Housing sales prices down?

You want to buy an apartment or a house in Luxembourg? We detail here all the good reasons to buy your home.

According to recorded deeds, sales prices in Q4 2022 compared to the previous year increased by :

• 8.2% for existing apartments (+14% in 2021)
• 9.6% for apartments in future state of completion (+4% in 2021)

It should be noted, however, that new sales take place more in expensive areas such as the capital city of Luxembourg or its suburbs.

Sale price of the apartments

On average, the prices recorded for the sale of old apartments in the Grand Duchy were 8,734 €/m² at the end of 2022 against 10,400 €/m² at the end of 2021 for the whole country. The average price range per square metre was €5,338 to €13,162 in older apartments.

In the new, VEFA apartments, the average price per m² was 9,347 euros, for a price range of 5,521 € to 15,348 €.

At the end of 2022, it was necessary to count on average 910.819 euros to buy an apartment, against 912.000 euros at the end of 2021.

On the other hand, the prices announced at the end of 2022 did not reflect this decline in core. In Luxembourg City the announced prices were at the end of 2022 on average 13,100 €/m² (13,000 €/m² at the end of 2021), with an average announced price of 1,062,735 euros (1,061,000 at the end of 2021) for an apartment.

In the neighboring municipalities, at the end of 2022, the advertised prices for the sale of old buildings were :

• 12,877 euros at the end of 2022 (13,056 €/m² in 2021) for Bertrange.
• 10,811 euros at the end of 2022 (10,898 €/m² in 2021) for the municipality of Hespérange,
• 9,941 euros at the end of 2022 (10,365 €/m² in 2021) in the municipality of Sandweiler,
• 11,243 euros at the end of 2022 (10,977 €/m² in 2021) for Strassen
• 9,894 euros at the end of 2022 (9,587 €/m² in 2021) for Walferdange.

Sales prices for houses

On average at the end of 2022, the announced prices for the sale of houses in the Grand Duchy of Luxembourg was 7,000 € / m² (6,013 € / m² in 2021) for the national average. The average advertised price of a house was 1,388,411 euros in 2022 against 1,379,694 euros in 2021.

In the city of Luxembourg, the average advertised price for a house was 2,060,022 euros in 2022 against 2,147,824 euros in 2021.

The small ring around Luxembourg remains very sought after for its excellent quality of life. We find for example prices of :

• 2.111.178 euros in Bertrange
• 2.413.118 in Niederanven.
• 1,807,341 euros in Sandweiler
• 2,463,478 euros to Strassen

The further away from Luxembourg City, the lower the price per m². A house in Esch-sur Alzette is expected to cost on average 906,191 euros in 2022 (933,465 euros in 2021).

*Source: Observatoire de l’Habitat – Liser

Average advertised rents by municipality

You want to rent a home? Here you will find our guide to renting.

But first, it is important to know that rents are generally increasing. Advertised prices per square meter averaged 34.15 euros per square meter over the past 12 months for the whole of Luxembourg at the end of December 2022.

The average rent per m² in Luxembourg City is 39.16 €/m², which is an average rent of 1,581 euros per month.

The rents of the apartments in the neighbouring communes are in the following averages:

• Sandweiler 2.018 euros, 1.453 euros in Walferdange, 1.888 euros in Hespérange and 1.900 euros in Strassen.

Here again the prices drop as you move away from Luxembourg. An apartment in Leudelange rents for an average of 1224 euros per month, in Steinfort it costs about 1,730 euros.

*Source: Observatoire de l’Habitat – Liser

What are the criteria for evaluating a home?

You are looking to rent or buy a home in Luxembourg. How do you know if the price offered is in line with the market or overpriced? First of all, a few points of reference.

Price and surface in m²

The price per m² of a property is inversely proportional to its surface. The smaller the property, the higher the price per m². An apartment of less than 50 m² in Luxembourg is on average valued between 20 and 25% more per square meter than a family apartment of 130 square meters.

Small surfaces are nowadays very much in demand by investors. Prices are often overvalued, especially in older homes. Landlords set their prices according to the prices asked in new housing.

Condition of the property

The condition of the property being rented or purchased is a point to be taken into account in the evaluation. But beware of hidden costs! Some jobs are obvious to do, others less so.

The energy passport is a good indicator of the intrinsic quality of the property. Depending on the rating of the property, you will need to do some work or incur significant costs to heat the home.

The attractiveness of the city of Luxembourg

The City of Luxembourg is very attractive because of its economic dynamism. The workplaces are close (Kirchberg, Cloche d’Or), as are the schools. See our article where to live in Luxembourg City.

Esch-sur-Alzette is today the 2nd economic center of the country. The Belval district is currently in full development. The attractiveness of the south of the country should be strengthened with the development of former industrial wastelands (see below) and transport development projects.

Outdoor spaces

Since the Covid crisis and subsequent containment, housing with an exterior is in high demand. Their price has increased considerably compared to homes without a balcony or garden.

Count on paying about 8% more for a balcony, 12% for a garden. In fact, garden-floor apartments are more sought-after today.

Valuation of garages and parking lots

Garages and indoor parking spaces weigh heavily in the acquisition budget of a property. Today, they can represent up to 15% of the total transaction amount.

Parking prices continue to rise. Valued on average in the territory at 42,000 euros at the end of 2017, they can be valued at 90,000 euros in new construction in Luxembourg.

The new districts to come in Luxembourg

Luxembourg continues its real estate development. The challenge today is to recover the maximum amount of land to achieve the number of housing units needed in the country.

The municipalities encourage construction on “hollow teeth”. They gradually transform green areas into building zones. The tax burden on wasteland and empty houses will increase considerably from 2023 onwards. The objective is to promote the sale or rental.

Industrial wastelands are increasingly valued.

Real estate developments in Luxembourg and the Centre region

Kirchberg district

Kirchberg represents a strong development potential for the City of Luxembourg. However, most of the land is privately owned and not always willing to sell.

Nevertheless, the Kirchberg district is developing at high speed to the north with the new Op der Schled site. In 2030, this will allow the number of inhabitants to increase by 10,000 people in nearly 5,000 additional homes. The Laangfur and Kuebebierg districts, the last remaining land reserves to be developed, are among them.

Cessange district

The Cessange district is also in full development. Located near the Cloche d’Or, it sees the creation of many Special Development Plans, notably around the Parc de Cessange. The housing developments Guddebierg, Im Grundchen, Rue Verte … should significantly increase the population of this district.

Neighborhoods Rollingergrund and Belair

The Rollingergrund area will also be transformed. A new “Faïencerie” project is being studied along the Rue de Rollingergrund. This project provides for a mixed living space, with an emphasis on urban living. Shops, nursery services, banks, restaurants and leisure facilities will be built around a central square. The Château de Septfontaines will be fully integrated into this new project. Pedestrian and bicycle paths will be part of the soft mobility promoted by the city of Luxembourg.

The “Place de l’Etoile” project at the intersection of the Belair district and Rollingergrund will also be developed. An exchange island will be created between Luxembourg and the neighbouring municipalities such as Strassen. A new tramway line will connect Luxembourg to Strassen. 600 housing units and new shops will also be built around a space dedicated to pedestrians. The Route d’Arlon should be diverted by a tunnel with the creation of an underground public transport station. This project is part of the Mobility Plan 2035.

Sandweiler

Sandweiler in the east of the city of Luxembourg should see the construction of 20 new buildings. Located in the immediate vicinity of the capital and the airport, the city of Sandweiler is a land reserve in the middle of nature. The project includes the construction of 110 additional housing units, office space and retail space.

South Region Real Estate Developments

Esch-sur-Alzette

Esch-sur-Alzette also continues its mutation with the creation of 2 new districts. This confirms the attractiveness of Esch-sur-Alzette and especially its good economic health.

Rout Lens on the Terres Rouges side will allow the construction of between 3,000 and 3,500 housing units by 2026. Metzeschmelz will be built on the industrial wasteland between Esch and Schifflange with 10,000 homes planned for 2028.

Belval sector

The Belval neighborhood continues its development on the Square Mile. The two Capelli Towers will have 15 levels of housing with a height of 50 meters. As for the Route Lens wasteland in Esch, it relies on the environment on its 10.5 hectares.

Eventually, Belval should have nearly 7,000 inhabitants, compared to less than 400 in 2022.

Sector of Schifflange

After the Belval district in the municipality of Esch-sur-Alzette, it is the Schifflange sector that will be completely restructured.

The 61 hectares of former Arcelor Mittal industrial wasteland will be converted into housing (10,000 units, 30% of which will be affordable), schools, high schools, etc. The circular economy and social mix will be favored, as well as soft mobility.

City of Dudelange

The city of Dudelange will also launch the construction of a new district. Neischmelz will have nearly 1,000 housing units, 50,000 m2 of shops and 17,000 m2 of green spaces.

City of Kehlen

The community of Kehlen is investing in a new village, Elmen. This eco-responsible, mixed-use project will eventually accommodate 2,000 residents on a 27-hectare site.

Real estate projects in the North region

The City of Wiltz is also considering the deployment of its brownfields.

By 2030, the “Wunne mat der Wooltz” project will see over 25 hectares converted into housing, workspaces and shops. Leisure and recreation areas will provide the 1,800 residents of the new site with a new quality of life. Here, too, the circular economy will be favored.

You will also find in this article the history of the latest real estate trends in Luxembourg.

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