LUXEMBOURG Trends and Developments Contributed by: Torsten Sauer and William Tanguy, Norton Rose Fulbright
Construction projects and urban development
Key Trends and Developments Government housing aid, policy measures and the role of Special Fund The Luxembourg government has played a sig - nificant role in supporting the real estate market through various housing aid measures. In April 2025, the Luxembourg Times reported that tem - porary housing aid measures had been extended until June 2025. These measures also included an increased tax credit of EUR40,000 for pur - chasing a primary residence and are expected to continue supporting the market during 2025, providing incentives for homebuyers and stabi - lising the housing market. At the same time, through the Special Fund for Affordable Housing ( Fonds Spécial ), the Luxem - bourg State continues to support the Luxem - bourg housing market and allocates substantial resources to invest in the creation of affordable housing. This measure increases the public affordable housing stock and supports develop - ers who lack liquidity and face difficulties selling their projects. The Special Fund for Affordable Housing is endowed with an additional multi-annual finan - cial envelope (2024-2027) of EUR480,000,000, which it intends to use to significantly increase the creation of affordable public housing, sup - port access to it, and revive the construction companies’ activity. In addition, the 2024 budget provided (through the Special Fund for Affordable Housing) approx - imately EUR1.45 billion to be invested in creating affordable housing (for rental and sale) from 2024 to 2027, commensurate with an annual average of more than EUR360,000,000 and doubling the Special Fund’s expenditures from 2023, which amounted to EUR184,000,000.
Several major construction projects and urban development initiatives have been undertaken in Luxembourg, contributing to the growth and transformation of the real estate market. The Luxembourg Times highlighted several key pro - jects, including the redevelopment of the Holler - ich district, the construction of the Stairs building in the Cloche d’Or district, and the development of PwC Luxembourg’s future headquarters, also in the Cloche d’Or district. These projects are expected to enhance the infrastructure and attractiveness of Luxem - bourg’s real estate market, providing new oppor - tunities for investors and homebuyers. Other key infrastructure projects will also be developed in the south of the country, such as the construction of the Südspidol project. Office market dynamics The office market in Luxembourg has faced challenges in recent years, with declining take- up and rising vacancy rates. The JLL report from Q4 2024 indicated that office space take- up reached its lowest level since 2011, with a total of 133,321 square meters taken up in 2024, down 24% year-on-year. The vacancy rate remained stable at 4.2%, but a moderate increase in vacancy is anticipated in 2025 due to speculative completions. Banking & Finance companies and the State of Luxembourg have been the most active occupiers during the past 12 months. Despite these challenges, the office market is expected to rebound in 2025, with rising rents and increased occupier activity. The CBRE report from Q4 2024 highlighted that prime rents remained well-supported, with no significant
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