LUXEMBOURG Trends and Developments Contributed by: Torsten Sauer and William Tanguy, Norton Rose Fulbright
Economic factors The economic environment in Luxembourg played a crucial role in shaping real estate mar - ket trends in 2024. The Luxembourg economy experienced modest GDP growth of 0.41% year- on-year, driven by private spending and a trade surplus. However, private consumption slowed in the second half of the year due to declining consumer confidence and weaker wage growth. Inflation remained below the eurozone average, with the consumer price index at 2.04% for 2024. The labour market faced challenges, with the unemployment rate increasing to 5.73%, up from 5.22% in the previous year. All these economic factors had a notable impact on the strength of the Luxembourg real estate market across all sub-sectors compared to the market high point in 2021. 2025: Anticipated Trends and Market Outlook As we move through 2025, the Luxembourg real estate market has started to recover, and several key trends are anticipated to shape its dynam - ics. Price movements The Luxembourg Times reported that house prices in Luxembourg rose modestly in Q1 of 2025 for the first time in two years, with a 1.4% annual increase in overall housing prices regis - tered at the end of 2024. This trend is expected to continue for the rest of 2025, with prices sta - bilising and potentially continuing to increase slowly. Pierre Clément, CEO of Nexvia, also believes that the progressive rise of real estate prices has kicked off and continues its upward trend, especially in Luxembourg City and the neighbouring municipalities. The STATEC report from March 2025 indicated that the prices of residential properties increased
by 1.4% in the fourth quarter of 2024 compared to the same period in the previous year. The pric - es of existing houses rose by 3.0%, while apart - ments increased by 1.8%. However, the prices of flats built off-plan continued to decline, with a 2.4% decrease recorded in the fourth quarter of 2024. Transaction volumes The number of real estate transactions is expect - ed to increase in 2025, driven by improved economic conditions and increased consumer confidence. The March 2025 STATEC report highlighted a significant increase in the number of transactions for existing houses and apart - ments in the fourth quarter of 2024. The num - ber of transactions for existing houses rose by 77.2%, while transactions for existing apart - ments increased by 108.2% compared to the same time last year. The market for off-plan apartments also showed signs of recovery, with a 272.6% increase com - pared to the number of transactions recorded in the fourth quarter of 2024, albeit that number remained below the pre-crisis average. Economic factors The Luxembourg economy is expected to expe - rience stronger growth in 2025, with GDP growth projected to increase to 1.46%. This is anticipat - ed to be driven by improved consumer spending and business investment, supported by expan - sionary fiscal policies and wage indexations. Inflation is projected to ease further to 1.60% in 2025, aligning more closely with central bank targets. The labour market is expected to improve, with the unemployment rate projected to decline to 5.53%. These better economic fac - tors, together with the trends outlined below, are expected to revitalise the real estate market.
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