The Bright Future of the Luxembourg Residential Real Estate Market

Christian Bühlmann

Julien Machuca

It seems that the Luxembourg residential real estate market has a bright future ahead of it. This year, we expect residential property prices to rise once again by more than 5%. By way of comparison, in 2018, prices increased about 2% in Zurich, were stable in Monaco and fell about 0.5% in London.

The imbalance between housing supply and demand is expected to continue to increase. It is mainly due to the arrival of foreign workers on the Luxembourg market. The number of foreigners in Luxembourg will keep increasing (expected growth between 25% and 33% until 2030). Luxembourg has seen outstanding development over the last decades, outperforming most other European countries. Property market growth is driven mainly by economic development and macroeconomic aspects.

The country is the second leading centre in the world for investment funds (after NYC) and the main jurisdiction for Chinese banks in Europe, with 14 banks. Luxembourg is also a leading European hub from an institutional point of view, with many European institutions based in the country (Court of Justice of the European Union, European Investment Bank, European Statistical Office, Eurostat, etc.).

These aspects are constantly driving new investors both institutional and private to come to Luxembourg. This wave of migration is expected to become even more significant in the coming months due to Brexit. Negotiated or re-voted? In any case, many English companies have already confirmed their willingness to relocate in Luxembourg. Luxembourg’s population has risen from 364,000 in 1980 to more than 600,000 today and continues to grow up by up to 2.5% per year. By 2050, the population could reach one million inhabitants.

Available data shows that Luxembourg is one of the fastest growing populations in the European Union. However, the supply of new housing does not keep pace with this population growth which is constantly increasing the residential property prices. Since 2010, average prices have grown by 50% across all types of housing (apartments, houses, existing property, and newly built) (according to Eurostat and National Housing Institute of Luxembourg). This exceptional price growth has put Luxembourg into the top five countries with the fastest rising housing prices. The most popular and therefore most expensive location in the country is Luxembourg City. Both the south and western side of the country are also accelerating their development supported by infrastructure projects.

Besides that, we clearly feel a development of the north of the country which is the most affordable place at the moment. We noted a sharp increase in 2018 that is expected to increase further in the coming years, supported by the development of the road transport network. Luxembourg, an attractive and dynamic market:

- 134 established banks
- Main jurisdiction for Chinese banks in Europe (14 banks)
- Second leading centre in the world for investment funds (after NYC). Total assets more than EUR 4,000 billion
- Prime beneficiaries of Brexit
- Open Economy: exports 80% of domestic production
- Social and political stability
- Heart of Europe: strategic position
- One of the highest standards of living in the world

TC PROPERTY PARTNERS S.A. is a Luxembourg-based independent property developer, also active in brokerage, property trading, and investment consulting. TC PROPERTY PARTNERS S.A. is member of XLNC member firm TRUSTCONSULT GROUP, a recognised corporate structuring group, established in Luxembourg in 2002.

XLNC MAGAZINE | No. 04 | November 2019


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