Luxembourg: A Hub of Opportunity
Nestled in the heart of Europe, Luxembourg boasts the highest purchasing power in Europe and a highly attractive real estate market for investors, developers, and tenants. The Grand Duchy’s population grew by over 26% from 2000 to 2024, reaching 672,050 residents, with the number swelled by cross-border workers who push the total to over 1 million on weekdays. This demographic growth drives demand for office spaces, commercial properties, and housing, positioning Luxembourg as a prime market for real estate investment.
2024 Market Performance: A Year of Transition
The Luxembourg real estate market faced a challenging 2024, particularly in the office sector, which saw take-up below 130,000 square meters—well below the five-year average of over 250,000 square metres. “The reason for this drop is the limited availability of suitable products,” explained Michael Taelman. “Corporates are willing to move, but it’s challenging to find attractive options.”
However, there’s optimism for 2025. “The demand is clearly there, and in the light of the impressive 2025 development pipeline for new office space from which a significant proportion is not yet sold or leased, we anticipate a much more active year to come,” said Michael Taelman.
Luxembourg office development pipeline (Q4 2024) CBRE Research
On the residential front, Luxembourg faces a “two-speed” market, of high-end properties which struggle to find buyers and more realistically priced housing. Scarcity due to costly land prices and landowner resistance to sell means housing demand continues to outstrip supply. Commercial properties in shopping centers and high streets saw a strong performance in 2024, in contrast to those located near residential areas. Meanwhile, the industrial and logistics sectors remained quieter. Despite political discussions, these trends are likely to persist into 2025.
I believe 2025 will see a return to activity in the investment market
Attractive Investment Yields
In 2024, investment volumes fell to €500 million, a third of the recent average, largely due to a shortage of attractive products. However, Luxembourg continues to offer appealing yields around 4.6%, backed by high-quality developments and triple-A occupiers. “I believe 2025 will see a return to activity in the investment market, driven by new products coming to market and large transactions already underway,” added Michael Taelman.
Shifting Client Demands: Adapting to New Realities
Shifting client demands are reshaping Luxembourg’s office market. Unlike neighbouring countries, where post-pandemic teleworking has drastically shrunk demand for office space, Luxembourg’s cross-border workers still face restrictions on the number of teleworking days allowed. Luxembourg offices have reported a slight reduction in the average space occupied per person but a rise in demand for collaborative and flexible workspaces. At the same time, office fit-out costs have surged, from €850 to €1,200 per square metre. This trend was driven by the fact that post-pandemic, many meetings are conducted online, requiring offices to provide additional meeting rooms, advanced audiovisual technology, and updates to heating, ventilation, and air conditioning systems.
Non-compliance will result in a significant tax disadvantage
ESG Compliance: A Key Priority for Clients
Environmental, Social, and Governance (ESG) compliance is becoming a central issue for Luxembourg’s real estate market. With Luxembourg setting a target to reach carbon neutrality by 2040—well ahead of the European Union’s 2050 goal—corporates are under pressure to meet stringent environmental standards. “Non-compliance will result in a significant tax disadvantage,” Michael Taelman explained.
CBRE Luxembourg is uniquely positioned to support clients with ESG compliance, as it is the only real estate advisor with an in-house, locally based ESG department. CBRE has over 200 real estate and energy experts at the EMEA level and it is growing its Luxembourg team of experts.
“We are proud to be certified for energy audits and EPCs for non-residential and residential properties in Luxembourg” said Michael Taelman. Additionally, CBRE is a certified assessor for key standards like LEED, BREEAM, and the German DGNB standard.
The company’s offices in the modern CBRE House building in the Cloche d’Or district exemplify CBRE’s commitment to ESG compliance and sustainability, blending smart building features with a prime location. “This project is a perfect example of how we deliver on our sustainability commitments,” said Michael Taelman.
A Bright Future: Luxembourg’s Real Estate Market in 2025 and Beyond
Looking ahead, Luxembourg’s real estate market remains buoyant, driven by medium and long-term development prospects. The country is a leader in smart building management systems, allowing tenants and landlords to optimise resources such as heating, occupancy rates, and booking systems via smartphones and other connected devices.
Additionally, Luxembourg’s commitment to sustainability extends beyond real estate. The country boasts a comprehensive public transport network, including free buses, trains, and trams, which will be further expanded in the coming decade, including a high-speed tram connecting Luxembourg City to Esch-Belval. The city’s growing cycling infrastructure also supports its commitment to a greener, more efficient urban environment.
As 2025 gets underway, CBRE remains a trusted leader in the Luxembourg real estate market. With its deep expertise, commitment to ESG, and a promising development pipeline, CBRE offers a holistic team of experts to guide clients through Luxembourg’s thriving real estate market.
2024 market highlights
— Office letting and sales totalled 132,600 m2
— The Luxembourg state letting the Laccolith building in Q4 was the largest deal of the year
— Office vacancy increased slightly to a still very low 3.9%
— New office completions reached 102,000 m2
— No significant changes noted in Q4 for prime rents
— Office investment was limited year, but residential helped pick up the slack
2024 office market in numbers:
Take-up: 41,163 m2
Vacancy rate: 3.9%
Prime rent: 54€/m2
Prime yield 4.60%
For more information, visit