Real estate firms flood into Luxembourg as prices soar
Luxembourg attractive to developers because there is little risk for sellers, expert says
The number of real estate developers newly setting up shop in Luxembourg shot up by 70% so far this year, as new businesses saw an easy chance to make money in Luxembourg's red-hot housing market.
The net number of developers receiving a licence to operate has risen to 388 so far this year from 228 over 2020, Economy Minister Franz Fayot said in response to a question from a lawmaker on Wednesday.
Luxembourg’s housing prices have sky-rocketed in recent years, with many people unable to get a foot on the property ladder and being forced to look in the three neighbouring countries if they want to become home owners.
“The market is very dynamic,” said Julien Pillot, head of office agency at Inowai. “It is possible to take on projects without there being a lot of risk and that surely attracts a lot of developers.”
The number of real estate agencies beginning a new business also soared, reaching 383 for a 33% rise compared to last year, data from the economy ministry shows. In 2019 there were already 1,058 real estate developers in Luxembourg and 1,221 real estate agencies, the figures show.
The cost of buying a home in Luxembourg has more than doubled in the past decade - the second-fastest rate in the European Union, the bloc’s statistics agency, Eurostat, said last month. Since 2018 prices have increased by more than 10% each year, adding 17% last year alone.
Prime Minister Xavier Bettel has vowed to tax landlords who allow their properties to stand empty in a bid to force them to make the units available for rent or sale. But real estate experts fear the move is likely to have little impact on the country’s exploding housing prices.
In a recent poll, 82% of Luxembourg voters said they were "greatly worried" about access to affordable housing.
Roughly a third of developers and agencies set up shop in Luxembourg City. The second-largest city, Esch-sur-Alzette, was also the second-most popular desination, attracting some 25% of the new businesses.