Irene De Muur

14th May 2024

Real estate in Luxembourg: changes, evolution, new horizons?

Looking back to the events of early 2022 and the developing global crisis and challenges, the real estate market in Luxembourg has known some changes: price adjustments, decrease of new constructions and high interest rates have taken their toll. We spoke to Andrea Maramotti, CEO of Immotop.lu about the actual situation.

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1. What real estate trends could you observe in 2023?

a. Market data

The 4^th Quarter data confirmed the general trend of the previous 3 Quarters of 2023, year where the residential real estate in Luxembourg had the lowest number of transactions on available records with 5,006.

This is a very puzzling data if we consider that in the last 17 years the country’s population increased by 38%, therefore the number of residential sales per thousand people decreased from 17.7 in 2007 to 7.6 in 2023, that is a massive drop!

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Number of sales of houses and flats in 2023 (transactions)
Source: Immotop.lu

-43% fewer transactions than in 2022

5.0K TX lowest on record TX vs Y-2 = -5.4K (-52%)

-5 sales per agency compared with 2023

TX vs Y-1 = -3.8K (-43%) = -5 Sales per Agency

Find out about property prices in Luxembourg

The financial volume associated with the residential transactions had a specular trend with a decrease to 3.7 Billions €, slightly higher than 2013: the market has basically wiped out 10 years of growth!

Number of sales of houses and flats in 2023 (financial volume)
Source: Immotop.lu

-€111 million in commissions in 2023

2023 market = €3.7 billion (-48% compared with 2022; -53% compared with 2021)

-130 million per agency

Lost Value of 3.4B € vs 2022. Commissions down by 103 million euros.

b. Annus horribilis

In summary the 2023 data are allowing us to define the year as the “annus horribilis” of Luxembourg real estate market:

The number of transactions decreased by -43% vs 2022 and -52% vs 2021
The financial volume decreased by -48% vs 2022 and -53% vs 2021

The brutal transaction market shortfall of -3.796 in just 1 year, had a financial volume repercussion of 3.4 Billions € which caused a very significant shrinking of the commissions pool for the real estate agencies: -103 Millions €, jeopardizing the very existence of many of them.

Sales of houses and flats Q4/2023
Source: Immotop.lu

c. Real estate prices in Luxembourg in the 4th quarter of 2023

The figures in this report are based on real estate advertisements for sale published on the Immotop.lu platform.

The evolution of prices/m² on a national scale
Source: Immotop.lu : April 2024 I Study based on data from Immotop.lu - 1st Quarter of 2024

In the 4th quarter of 2023, the average price of a property for sale in Luxembourg was €8,531/m², total stability compared to the previous year (anecdotal variation of -0.01% with €8,541/m² in the 4th quarter of 2022). Compared to the third quarter of 2023, where the average price was €8,617/m² for the acquisition of a property in Luxembourg, the average price per m² decreased by just -0.9%.

The energy class of the properties put up for sale plays an important role in the sale price. In the 4th quarter of 2023, energy class G housing cost on average €7,156/m², while energy class A housing cost on average €9,547/m², a difference of €2,391/m².

The evolution of prices/m² according to the region.
Source: Immotop.lu: April 2024 I Study based on data from Immotop.lu - 1st Quarter of 2024

Price per m²

Looking at the different regions of Luxembourg, we see that the average price per m² in the fourth quarter of 2023 was €11,018/m² for the Center region, €6,981/m² for the South region, €5,785/m² for the North region, €7,241/m² for the East region and €7,987/m² for the West region.

Some regions are recording price variations per m² compared to last year. Indeed, the South, North and West regions recorded respective decreases of -5.8% and -5.9% and -2.1%. The Eastern region (-0.7%) remains stable, while the Central region saw its average price per m² increase by +2.0%.

Average price difference per m2 of energy class A-C and F-G properties for sale in Luxembourg (Quarter 1 - 2024).
The percentage changes in prices per square meter are based on the previous quarter: Q1-2024 vs Q4-2023.
Source: Immotop.lu: April 2024 I Study based on Immotop.lu data - 1st quarter 2024

As for the impact of the energy class on the average price, we observe a greater disparity depending on the region. For example, the average price difference between properties in energy class A-C and properties in energy class F-G translates into +1,563 €/m² for the Center region, +671 €/m² for the West region, +1,224 € /m² for the East region, +1,378 €/m² for the South region, and +172 €/m² for the North region.

Average price per m² of properties for sale in the areas of Luxembourg-City (Quarter 1 - 2024).
The percentage changes par square meter are based on the previous quarter: Q1-2024 vs Q4-2023. Neighborhoods in Luxembourg-City for which data is insufficient are excluded from this ranking.
Source: Immotop.lu: April 2024 I Study based on data from Immotop.lu - 1st Quarter of 2024

In the Luxembourg capital, the average price per m² stood at €12,487 in the 4th quarter of 2023, or 0.5% more than the previous quarter. Some districts of Luxembourg City far exceed this average, notably Belair (14,571 €/m²) and Kirchberg (13,014 €/m²). On the other hand, the districts of Dommeldange (9,864 €/m²) and Rollingergrund (9,763 €/m²) were the least expensive in Luxembourg City in the fourth quarter of 2023.

Rent prices/m² in Luxembourg

On the rental side, the average rent per m² across the country stood at €25.89/m² in the 4th quarter of 2023. The average rent per m² in Luxembourg is constantly increasing with €24.12/m² (i.e. + 7.3%) compared to the 4th quarter of 2022 and €23.47/m² (i.e. +10.3%) compared to the 4th quarter of 2021.

Better understand the year 2023

Our data is calculated over a period of 12 months to allow an in-depth analysis of the evolution of average prices per square meter. With this in mind, here are some additional elements to better understand the context of our statistics.

2023 vs 2022 Property Listings Overview.
The percentage changes are based on the comparison of the year 2023 vs 2022.
Source: Immotop.lu

Properties for sale: Prices are falling, surface areas are also decreasing.

The year 2023 compared to the year 2022 recorded a drop in the price per square meter of properties offered for sale of around -3.3%. This trend is accompanied by a decrease in the average surface area of properties advertised for sale (-3.3%). These two factors had a notable impact on the average selling price of properties, which fell by -6.6%.

This downward trend is mainly driven by the sale of existing properties, with a significant drop of -6.2%. It should be noted that, far from this dynamic, the average sale price of new properties changes little (-0.1% drop recorded).

A prolonged presence of goods on the market

In 2023, the stock of properties advertised for sale increased by +9%. This development suggests that properties are staying on the market longer, which leads to an increase in the average sales period.

2. What real estate trends could you observe in the first quarter of 2024?

d. Confidence by the consumers

In the first Quarter of 2024 we are recording a significant increase in interest by our users in buying properties, generating more sale leads vs Q1/2023: +66%, this indicates a progressive return in consumers confidence, with people eager to explore and investigate their options on the market. It is the first important step towards a market rebalance.

Immotop.lu: Analysis of the property market in the Grand Duchy of Luxembourg

1st Quarter 2024

Read the report (French version)

e. Government intervention

We are confident that the new Government led by Prime Minister Frieden, is managing this generational crisis at the best of its abilities and that the real estate industry will continue to be supported towards its recovery with adequate measures.

f. Market cycle (Hexagon)

We have analysed several European and Global markets with the help of our data scientists, our goal is to understand and predict the possible and likely future development for Real Estate in Luxembourg.

A typical Real Estate Market goes through 6 phases, highlighted in the hexagon below: recovery, growth, maturity, slowdown, decline, rebalance.

Luxembourg residential property market cycle
2007 base - Statec data
Source: Immotop.lu

The Luxembourg market has seen from 2007 a fairly standard and normal development of the first 3 phases, each lasting few years: Recovery, Growth and Maturity.

What is surprising and peculiar is the fast-paced acceleration of the following 2 phases: Slowdown and Decline, each of them lasted just 1 year.

The reason why this unusual phenomenon has happened is the significant increase of the interest rates, an external driver, an exogen factor that has severely impacted the market.

We believe that the Luxembourg market has hit its nadir in 2023, and that the beginning of the Rebalance phase is to be expected for 2024.

In the Rebalance phase the average price of the Transaction will decrease, driven either by a decrease of the prices per square meter and / or by a decrease of the average surface of the properties sold: that will lead to an increase of consumers interest and affordability, fostering a growth in the number of Transactions.

We therefore expect construction companies and developers to adapt their offer to the new market reality, increasing their available stock of smaller, more affordable properties.

Obviously, we do not expect the prices per square meter to decrease at 2007 level, we rather envision the market cycle as a growing spiral that will re-start at a higher price-level.

In short, we can see a brighter future for the real estate market in Luxembourg for the years to come.

3. Collaboration between Immotop.lu and Spuerkeess: How and since when?

For Immotop.lu it’s always an honor and a privilege to partner with Spuerkeess: since 2019 our collaboration has been mutually beneficial, increasing the level of service and strengthening the relevance of either company for their respective customers.

Immotop.lu believes in technology, in continuous improvement and in strong IT investments to deliver the best possible user experience: our focus is always on the consumers.

In 2023 we have decided to help our customers, the real estate agencies, in a moment of dire need, by keeping our prices at the same level of 2022: a very heavy financial effort from our side to offer them the most important support throughout this crisis.

Irrespective of that, we continued to invest, for example we recently added a more responsive and intuitive search within the map on the result page, and we will continue to do so, serving our users and delivering them what they need to find the real estate solution they’re looking for.

We look at 2024 as the year when the real estate market in Luxembourg will start the rebalance phase; partnering with Spuerkeess allows Immotop.lu to offer a significant added value to our users in understanding the feasibility and impact of their project of living, usually the most important financial decision in a person’s life.

4. What is your most valuable tip for buyers?

Now it’s a good time to buy or at least to consider buying, after 20+ years the market has turned into a buyers’ market, where customers have more leverage, can better negotiate and have less competition for their dream home.

When you’re looking for your dream home you’re making a key decision in your life, therefore you need to be prepared. It’s crucial to establish your own criteria, the parameters that are important to you. We at Immotop.lu can help you with the search, in structuring your thought process.

The easiest way to search, and this is a feature unique to Immotop.lu in Luxembourg, is by selecting on the map your main point of interest, it could be where you work, your kids’ school, your favorite sporting facility or entertainment area… From that point of interest, you can select your preferred way of moving around (walking, cycling, driving) and the transit time that is suitable for your needs: just as example you might want to live at 15 minutes driving distance from where you work.

Obviously, you can also draw the area on the map, selecting your favorite part of the country or the neighborhoods you’re picturing yourself living in.

Once you’ve selected your area of interest Immotop.lu can help you refine your search by giving additional inputs like the budget at disposal, the surface you need, the type of property (house or apartment), whether you need a garden, a parking…

For the budget pay attention to the Spuerkeess calculator on every listing on Immotop.lu, it’s a tremendous help.

It’s a very exciting, intuitive process that will lead you to identify the perfect place for you!

At Immotop.lu we’re working tirelessly to continuously get better, we’re very aware of the new AI developments and will integrate all meaningful improvements in our platform.