Luxembourg real estate market trends in 2025

Residential market trends

The Luxembourg residential real estate market at the beginning of 2025 shows signs of recovery after two years of stabilization and decline. The main factors contributing to this recovery are the fall in interest rates, the fall in market prices and the extension of tax breaks. In the following, we will have a closer look at these trends and current prices by analyzing the different market sectors separately.

Sales price trends

In general, there has been, during the last two years and even a little more, a decrease in prices. The average asking price for real estate in February 2025 stood at 8,179 euros, which is a decrease of 5.06% compared to March 2024.

Source: Immotop

As for prices in the different regions, in February 2025, the most expensive regions were the centre and the south, with 10,493 euros per square meter and 6,849 euros per square meter, respectively. The cheapest are the north and the east with 5,814 euros per square meter and 6,947 euros per square meter, respectively.

However, the changes within the residential market are not homogeneous and the sectors of existing homes, apartments and new apartments each present different trends:

Existing homes

Source: athome.lu

As far as the Luxembourg housing market trend is concerned, it is clear that this segment of the market is showing renewed interest and signs of recovery.. Prices increased by 3.5% in the first quarter of 2025 compared to the previous quarter, with an average price of 5,905 euros/m² and compared to last year the rise was even higher reaching 3.7%.

In terms of regional trends, prices of existing homes have shown an upward trend, especially in the east, centre and south with increases of 5.5, 5.0% and 4.3%, respectively. 

Existing apartments

Source: athome.lu

In Luxembourg, property prices for existing apartments are generally stable, growth from the previous quarter was just 0.1% maintaining an average price of 7,790 euros per square meter. In terms of regional trends, existing apartment prices are down slightly except in the east and north.

New apartments

Source: athome.lu

For new apartments, according to Jerry Grbic, CEO of the Luxembourg Bankers Association, the situation is far from resolved and the market remains virtually stagnant. However, the first quarter of 2025 shows a slight upturn of +1.2% compared to the previous quarter. In terms of regional trends, new apartment prices have fallen considerably in the west and east but have risen in the south.

Extension of tax measures

At the end of 2024, Prime Minister Luc Frieden gave good news to those interested in buying and rushing to take advantage of the tax relief that would end at the end of the year and those who would not be able to take advantage of it in time. He announced that the tax measures would be extended until July 1, 2025 since, he said, the government had no intention of interrupting the current momentum of the real estate market.  The measures that will then remain in place until July 1, 2025 are as follows:

• Reduction of registration fees: Registration fees for the acquisition of a property remain reduced from 7% to 3.5%.  This measure applies to existing properties as well as to sales in future completion status (VEFA) if the purchase relates to a principal residence and only to VEFAs for purchases made by investors.
• Principal residence tax credit (“Bëllegen Akt”): up to 40,000 euros per person for the purchase of a principal residence.
• Rental housing tax credit (“Bëllegen Akt Investisseur”): Up to 20,000 euros per person for housing under construction (VEFA) intended for rental.
• Accelerated depreciation: a rate of 6% per annum for six years, applicable to new housing (VEFA), with a maximum limit of 250,000 euros.
• Reduced capital gains tax: The rate is reduced to 10% (from 20%) on the sale of real estate. A total exemption applies to the transfer of properties with an A+ energy rating or for the management of social rentals.

Rental market

Looking at Luxembourg's real estate statistics for the rental market, it is clear that unlike the buying market, the rental market has only been rising for more than five years.. In February 2025, the average asking price for rented residential properties stood at 28.65 euros per month per square meter, up 6.07% compared to March 2024.

Source: Immotop

However, despite this prolonged and steady increase, there has been a slight decline in rental prices in the first quarter of 2025. Residential rents fell by 1.8%, and apartment rents fell by 2.5%. The average rent for an apartment currently stands at 1,779 euros/month and for a house at 3,152 euros/month.

The price evolution is, however, not homogeneous; rents in Luxembourg evolve differently according to the regions. Some areas, such as the south and the north, experience an increase, while others, such as the centre, show a decrease in both house and apartment prices. There is also a significant decrease in apartment rental prices in the west, reaching 9.9%. 

Source: athome.lu

Source: athome.lu

Commercial real estate market trends

The commercial real estate market in Luxembourg has varied dynamics depending on the segment, be it retail, office or logistics. Below, we will explore them one by one.

Retail and shopping centres

In the retail sector, the fact that consumers increasingly favour the convenience of online shopping stands out, E-commerce is becoming more and more relevant with retailers such as Amazon and Alibaba gaining importance day by day. In Luxembourg, however, the retail market remains resilient thanks in part to a diversified offer and initiatives such as mixed-use retail spaces combining retail, residential and leisure. The city centre continues to attract buyers and prime rents have reached 145 euros per square meter per month.

The trend towards online shopping is increasing which has pushed local retailers such as Auchan and H&M to improve their e-commerce offerings and online shopping experience. To cope with this trend, shopping centres are increasingly adopting diversification strategies, integrating leisure areas, non-retail amenities such as offices and innovative experiences to attract shoppers.

Offices

The Luxembourg office real estate market is showing remarkable resilience, especially in a global context marked by uncertainty. Despite challenges such as rising inflation and the impact of the war in Ukraine, demand for high-quality space remains robust, driven by multinational companies and financial institutions that value the country's strategic location.

Unlike many other economies, Luxembourg has bucked the post-COVID-19 remote working trend, thanks to a robust service sector and the incentive for many cross-border workers to physically commute to their offices stemming from tax and social security arrangements. This is reflected in a low vacancy rate of between 2.5% and 5% in the most attractive areas, such as Kirchberg and Cloche d'Or, where rents average 54 euros per square meter per month. This is relatively high compared to the rest of Europe.

However, the market as a whole is under pressure. In less central areas, vacancy rates have increased in recent years, leading to a reconsideration of the use of space. This involves, on the one hand, a drive to modernize existing stock and, on the other hand, the conversion of older offices into mixed-use developments, with an increase in retail and leisure facilities currently sought after by tenants

An emblematic example of the sector's continued development is the new PwC campus in Cloche d'Or, which demonstrates how high-quality offices remain a strategic priority for large corporations.

Logistics

Among the main real estate sectors under development in Luxembourg, logistics is currently recording the highest investment volumes. This is due to the country's strategic location in the heart of Europe, which enhances its attractiveness as a logistics and distribution hub.

These volumes should normally be maintained in 2025, making the sector one of the best performers over the next five years. Demand is increasing for modern, well-located warehouses, especially near major cities.  However, the market faces challenges such as limited land availability and rising construction costs.