Luxembourg real estate: Confidence rises amidst headwinds

The 2026 LuxReal Consensus Survey, which gauges the mood of Luxembourg real estate professionals, presents a paradox: despite facing a more constrained environment, market confidence is actually growing.

Luxembourg

Nearly half (49%) of respondents expect interest rates to rise in the next year (up from 26% previously), and a significant 83% identify access to financing as a primary challenge for the sector.

Over 71% anticipate further increases in construction costs over the next 12 months, with 29% expecting a rise of over 3% – more than double the proportion from a year ago.

Beyond financing and costs, professionals also point to increasing regulatory requirements, ESG constraints, and limited land availability as ongoing issues.

Despite these headwinds, 50% now view Luxembourg as more attractive than other European real estate markets, up from 43% last year.

The country's economic and political stability remains its most significant competitive advantage, cited by almost all participants.

Residential real estate continues to be the most dynamic and attractive sector, surpassing offices and logistics.

72% anticipate rising rents, while price expectations are nuanced but generally positive (37% foresee moderate or strong growth).

To support market recovery and new developments, professionals highlight simplifying administrative procedures and improving access to financing as the top two priorities.

Julien Licheron, researcher at LISER and author of the report, said: “The results clearly show that professionals distinguish short-term difficulties from long-term fundamentals. Market participants have integrated this uncertainty into their expectations. Financial and operational constraints are real, but they do not undermine confidence in Luxembourg's institutional stability, demographic dynamics and structural demand.”

Romain Muller, president of LuxReal, added: “Market participants who are ready to move forward need structural rather than temporary solutions to facilitate project development and unlock investment. Faster administrative procedures, improved access to financing, and a predictable regulatory framework will be essential to restore market momentum and address growing housing and infrastructure needs.”