Despite its size, Luxembourg is a developed country with a flexible economy. Many British businessmen are already considering a duchy to conduct their activities in case of unfavorable conditions after Brexit in the UK. With such interest, real estate in Luxembourg began to grow in price.
Real estate in Luxembourg: problems and market prospects
Many insurance companies, banks and funds have already started the process of moving from the UK to Luxembourg. Among them: a large insurance corporation American International Group Inc, companies Hiscox, FM Global, Blackstone and RSA Insurance Group. The new headquarters of JPMorgan Chase & Co for the EU zone will also be Luxembourg.
Experts predict that such changes will increase financial segment indicators by 7%. In addition, the country is expected to create about 3 thousand jobs, which will invariably affect the real estate market. Prices for residential and commercial objects have already increased, and the trend will continue to be observed. Now even relatively small houses will start from the mark of €1 million. The problem is lack of supply against the background of increased demand. In order to eliminate the deficit, many local construction companies have already started new projects in different areas of the Duchy. One example is the Soho complex, which is located on the outskirts of the capital. This district is considered a dysfunctional one, where criminal outbreaks and drug trafficking have been observed.
Experts hope that the construction will help improve the atmosphere, displace drug traffickers, and eventually the district will begin to develop. At present, two- and three-room apartments cost from €566,814 to €869,734. The insurance company ING Luxembourg has already bought 30 apartments for staff accommodation.
In expensive areas the real estate of Luxembourg reaches €2 million. Last year the value of the objects increased by 4.9%, the average price of housing is €650 thousand. It is cheaper to buy real estate in the north of the duchy, for about €500 thousand.
For a small area, the real estate price is quite high, and people move to Germany and France in search of affordable housing. In a year, about 13 thousand people leave Luxembourg.
But this situation is compensated by the influx of foreigners who come to the country to carry out professional activities. Their number exceeds the number of those who left.
On the real estate market of Luxembourg there is an urgent need not only in residential facilities, but also in commercial premises. Every year the country requires 6 thousand new houses and apartments, and even more office and commercial premises. In addition, outside the capital there is a shortage of infrastructure and administrative buildings, including schools.