Why is housing in Luxembourg more expensive the smaller it is?

Rudolphe ABEN

In Luxembourg, it is not uncommon for small apartments to cost more than larger ones. This may seem paradoxical, but there are several economic and social factors that influence the property market.
High demand
The Luxembourg property market is very tight, with high demand for homes of all sizes. This is due to the country's strong economic growth, the presence of major European institutions and Luxembourg's tax attractiveness. This demand is particularly strong for apartments, due to the concentration of the population in urban centers and the preference for more convenient and accessible housing.
Shortage of supply
Due to the high demand, the supply of housing in Luxembourg is relatively low. This is particularly true of affordable housing, which is often in short supply in urban areas. Property investors and developers often build small apartments to maximize their profitability and make efficient use of the available space. In addition, the minimum size of dwellings is set by Luxembourg legislation, which requires a minimum size of 24 square meters for studios and 30 square meters for one-bedroom apartments. This regulation favors the construction of small dwellings, which exacerbates the shortage of larger dwellings.
Quality of life
Luxembourg is one of the richest countries in the world, with a high quality of life. This is reflected in house prices, which are often higher than in other countries. Smaller apartments can be seen as a practical solution for people who work in urban centers and want to enjoy the benefits of city life. In addition, smaller homes can offer advantages in terms of proximity to public transport, shops and services, as well as a more active social life.
In conclusion, the reason why smaller apartments are often more expensive in Luxembourg is due to the high demand, the scarcity of supply and the high quality of life in the country. Investors and developers seek to maximize their profitability by building smaller units, while buyers and tenants are willing to pay more to enjoy the urban lifestyle and high quality of life that Luxembourg offers.