The Future of the Real Estate Market: An Exclusive Interview with Irfan Babacic
An exclusive interview with Irfan Babacic, a leading real estate developer in Luxembourg
Interviewer: Rudolphe Aben, founder of Nextimmo.lu
Rudolphe Aben: Hello, Irfan Babacic. Thank you for taking the time to speak with us today. As a leading real estate developer in Luxembourg, your perspectives on the real estate market are invaluable. Let's get straight to the point. You recently made some bold predictions about the evolution of the real estate market by the end of 2024 and in 2025. Can you explain why you think the market will bounce back by the end of this year?
Irfan Babacic: Hello, Rudolphe Aben. I am delighted to be here. Yes, I am convinced that the real estate market will regain its momentum towards the end of 2024. A main reason is the expiration of government subsidies. Historically, we have observed similar patterns, for example at the end of 2008. At that time, the end of government aid and the subsequent market adjustment led to a significant increase in demand and real estate prices.
Rudolphe Aben: Can you explain this in more detail? Why does the expiration of subsidies lead to a rise in the real estate market?
Irfan Babacic: Of course. When government subsidies come to an end, there is often a sense of urgency among buyers and investors trying to benefit from the last advantages before they disappear. This leads to a temporary increase in demand. At the same time, the markets adjust to the new reality without subsidies, which often has a stabilizing effect. People have more confidence in the market dynamics because they are no longer influenced by artificial interventions.
Rudolphe Aben: That is very interesting. You also mentioned that you think the market will be much better by mid-2025 compared to 2023. What are the factors that explain this optimism?
Irfan Babacic: There are several factors. First, the market correction caused by the expiration of subsidies will be fully digested by then. Second, we expect a drop in interest rates, which will reduce financing costs for buyers and investors. At the same time, significant wage increases in Luxembourg will increase purchasing power and make real estate more affordable. Third, the population of Luxembourg continues to grow, which increases the demand for housing. These combined factors will stimulate the market and lead to a recovery. We see great potential in VEFA (sale in future state of completion) as buyers and investors will regain confidence in the market and be ready to invest in new projects.
Rudolphe Aben: That sounds promising. Can you tell us a bit more about VEFA and its importance for the real estate market?
Irfan Babacic: Of course. VEFA, or sale in future state of completion, is a very attractive option for buyers and investors. It allows them to purchase properties that are still under construction, often at a lower price than finished properties. This type of sale also offers developers a secure method of financing, as they receive advance payments. During periods of market growth, as we expect for 2025, VEFA becomes particularly attractive because buyers can benefit from future increases in value.
Rudolphe Aben: Thank you very much, Irfan Babacic, for these detailed and enlightening explanations. Your companies are currently investing expansively. Can you explain why you are entering this expansion phase now?
Irfan Babacic: Of course. The market is currently in a recovery phase after a prolonged period of stagnation. We see this as a strategic opportunity to invest before prices rise significantly. By investing early, we can benefit from lower prices and be ready when the market has fully recovered and demand increases. It is a long-term strategy based on our conviction that the market will sustainably recover.
Rudolphe Aben: Those are wise words. Thank you very much, Irfan Babacic, for being with us today and sharing your perspectives.
Irfan Babacic: Thank you, Rudolphe Aben. It was a pleasure.
About the author:
Rudolphe Aben is the founder of Nextimmo.lu, a leading hybrid real estate platform/agency. He collaborates closely with many former competitors who have become his partners. With years of experience in evaluating market trends and advising investors, he regularly writes for leading specialized magazines in Luxembourg and speaks at real estate conferences.
About Irfan Babacic:
Irfan Babacic is a recognized figure in the real estate sector and acts as a leader and founder of several major real estate development companies in Luxembourg. He has extensive experience in the real estate field and is particularly known for his work in crowdfunding and project management. His companies are currently investing expansively, as he is convinced that the market is in a recovery phase and that the time is right to invest.