Real Estate in Luxembourg: Between a Slowdown in New Construction and an Uncertain Recovery
Faced with a market still under pressure, recent announcements by the Luxembourg government confirm a change in approach: fewer generalized subsidies, but the retention of certain key levers to support homeownership. In this context, the role of existing real estate as a stabilizing solution becomes central, while the new-build sector struggles to restart.
🎯 Gradual end to tax incentives, but the "Bëllegen Akt" is maintained
Addressing the Chambre des députés, Prime Minister Luc Frieden clearly indicated that the State will not indefinitely prolong the exceptional measures intended to support the market. The tax incentives introduced in 2023, designed to reduce acquisition costs for buyers, will end on June 30, 2025. The only exception: the "Bëllegen Akt" tax credit, which will remain in effect with a ceiling of €40,000. The latter allows young households, in particular, to purchase an existing property while significantly reducing the costs linked to the notarial deed. A simple, concrete measure that remains highly appreciated.
🧱 The new-build sector is struggling: sluggish activity and a drop in VEFA sales
The new construction sector is going through a difficult period, despite positive economic forecasts for 2025. According to the Chambre des métiers, activity remains in negative territory, with an economic balance of -15 in the first quarter. The number of jobs has dropped by 4,600 positions in 2024, and VEFA (vente en l’état futur d’achèvement - off-plan) sales have still not regained their pre-crisis pace. Between 2022 and today, the market has fallen behind by more than 5,000 housing units sold compared to the average observed between 2014 and 2020. Despite a slight rebound at the end of 2024, momentum remains fragile.
🏢 The public sector: a pillar of the market while awaiting the return of private buyers
In the absence of a massive return of private buyers, the public sector is currently carrying a large part of the demand. 35% of recent sales come from acquisitions by the State, the Fonds du logement, or the Ville de Luxembourg. The Fonds du logement, a key player in affordable housing, is actively pursuing its projects: no construction site stoppages to report, and 1,300 additional housing units planned by 2029. This institutional support limits the damage to the sector's activity, but is not enough to revive a balanced and sustainable market.
🧠A fragile stabilization, between caution and calls for adjustments
Among professionals, opinions remain divided. Michel Reckinger, president of the UEL, acknowledges that "the market has hit rock bottom" but that the situation now seems stabilized. He also proposes a technical adjustment to the subsidy eligibility rules: taking into account the date of the compromis (preliminary sales agreement), rather than that of the notarial deed, to avoid delays caused by bottlenecks at notary offices. Conversely, the Chambre des métiers warns of the risk of stifling the nascent recovery if subsidies disappear abruptly. Buyer confidence remains fragile, and momentum will depend largely on the signals sent in the coming months.
đź“Ś In summary
- Exceptional tax incentives will end on June 30, 2025, except for the "Bëllegen Akt" (up to €40,000).
- New-build real estate remains in difficulty, with few new sales and significant job losses.
- The existing property market is supported by notary subsidies and remains a more accessible option.
- The public sector acts as a stabilizer, but the return of private demand remains crucial.
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