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The first survey conducted by LuxReal among its members highlights a renewed sense of confidence among real estate professionals. While outlooks vary across market segments, the general trend is one of optimism, driven by the resilience of the residential sector and the country’s strong economic and political stability.

In April 2025, LuxReal surveyed its members – institutions, companies, and professionals across all segments of real estate – to take a snapshot of the Luxembourg market. With 103 responses collected, this inaugural exercise provides a representative overview of perceptions, expectations, and priorities in the industry.

The findings are structured around four key areas:

• the current state and future outlook of the market,
• financing and investment,
• the influence of external factors,
• and Luxembourg’s strengths and weaknesses as a real estate location.

A climate of renewed confidence

The survey results reveal that confidence is gradually returning to the Luxembourg real estate market, particularly in the residential segment, where professionals foresee growing activity and rising rents.

The residential market stands out as the strongest driver of optimism: 49% of respondents already report increasing activity and 71% expect rents to rise in 2025. Looking five years ahead, 78% foresee growth in activity and 78% expect prices to rise (around 1% to 3% per year, according to 55% of respondents).

The industrial segment is perceived as largely stable in the short term, with 56% anticipating growth in activity over the medium term.

Views on the office market remain split in the short run (32% predict a decline in activity), yet the medium-term trend is expected to turn positive again.

The retail sector continues to face more caution: 46% of respondents foresee stability, 32% growth, and 23% decline in activity over the next five years.

This hierarchy is also reflected in perceived investment opportunities: residential (71%), offices (68%), and industrial (50%) lead the way, far ahead of retail (23%).

Rehabilitation as the emerging opportunity

One striking result concerns the growing interest in renovating and rehabilitating existing buildings. Half of respondents consider this the most promising investment opportunity, compared to 32% for the development of new residential districts. Among architects and developers, this preference is also clear, reflecting a shift aligned with sustainability goals, user expectations, and cost efficiency.

Financing: uncertainty and the central role of local banks

The sharp increase in interest rates since 2022 has profoundly impacted the market.

Between mid-2022 and early 2024, residential property prices dropped by an average of 16.3%, underlining the direct link between financing costs and market dynamics.

Looking ahead, expectations remain highly fragmented:

• 46% of respondents expect rates to fall within the next 12 months,
• 28% foresee stability,
• 26% anticipate a further rise.

Despite this uncertainty, a clear consensus emerges regarding the role of local banks. They remain the primary source of financing for 44% of professionals, ahead of private investors (22%) and Funds (25%). Even large international firms confirm this reliance, with local banks seen as central to project financing.

External factors: regulation, costs, and sustainability

The study highlights the multiple external forces shaping Luxembourg’s real estate market.

• Regulation: 81% of respondents identify environmental regulations as a key influence, followed by zoning rules (59%) and construction standards (57%).
  
  
• Construction costs: material prices are considered the number one driver by 49%. For 2025, most expect either a slight increase (1–3%) or stability.