What’s new in Luxembourg’s property market?

Six months after the inaugural Inform & Connect event by Quintet Private Bank Luxembourg, panelists provide insights and analysis on the evolution of the Luxembourg real estate market based on their respective sectors since February 1, 2024.

Find here the feedback from Morgan Mével – Senior Investment Advisor, Capital Markets at INOWAI

“In the last six months, the slowdown in the Luxembourg residential market has continued.

On one hand, sales of “off-plan” properties are largely on hold, except for projects that will be completed in the coming months. Buyers are hesitant to sign pre-sale agreements due to uncertainty about the stability of developers and contractors, and financing options have become more limited.

On the other hand, the existing property market is performing better, with some sales occurring without negotiation. After two years of a challenging market, some developers are experiencing liquidity issues and are selling land at a loss. Others are completely rethinking their projects to increase efficiency and returns, such as developing co-living spaces. Additionally, the State and the City of Luxembourg have purchased strategic land from developers to increase affordable housing. New government measures have been announced to simplify and accelerate building authorizations.

In the office market, we have seen a certain decrease in values compared to the peak in 2022, although Luxembourg is showing more resilience than neighboring countries during this period. Two significant transactions were completed in the first half of 2024: the sale of the Royal Park building at a yield of 4.75% and the sale of the Hygge building in the CBD, where INOWAI acted as the buy-side agent. These deals signal the return of family offices to the market. However, institutional investors, who were the primary market players previously, are now more cautious and facing difficulties in raising new equity.

We hope that the recent 25 basis point decrease in key ECB interest rates, along with an anticipated further decrease, will revive activity in the real estate market by the end of the year.”

For the complete article and insights from the other panelists Martine Gerber-Lemaire (Head of Real Estate practice – DENTONS LUXEMBOURG), Jerry Grbic (Chief executive officer – ABBL), Michel-Edouard Ruben (Senior economist – FONDATION IDEA) and Jean-Paul Scheuren (President – REAL ESTATE CHAMBER LUXEMBOURG), please visit the Quintet Private Bank Luxembourg website.