According to the report “Luxembourg Real Estate 2020: Building blocks for success”, which makes a number of predictions of the future environment of real estate in the Grand-Duchy, the Luxembourg real estate market has thrived over the last decade thanks to financial strength as well as geographic and demographic features, and this trend is set to continue.

According to PwC Luxembourg, there are six priorities that players in the real estate market need to confront and tailor their strategic response to now, to emerge as leaders:

1. The office and residential markets will grow by nearly 60% and 50% respectively over the period from 2012 to 2020. This growth is driven mainly by economic development and its resulting need for office space and an augmented workforce.
2. The current volume of office space for rent will not be enough to meet demand. If the economy grows as expected, businesses will be squeezed for office space, and Luxembourg will experience a marked shortage of office properties.
3. Mobility and infrastructure developments will be crucial to the country. With the projected increase of population and cross-border employee numbers by 2020, infrastructure needs will grow further, and efficient mobility solutions will have to be adopted over a tight timescale in order to keep pace with demands.
4. The number of foreigners in Luxembourg City and its close neighbourhood will keep on increasing, and the residential rental market will expand in this area. A growing number of Luxembourg nationals with lower income will move to surrounding regions within the country, or even move across the borders.
5. More apartments than houses will be built, in order to best address the needs and budgets of households. The average number of persons by household has significantly decreased over the last decades, and this trend will continue with the arrival of new residents.
6. New investors, both institutional and private, will come to Luxembourg. Pension funds and other institutional investors will show more interest in operating in the Luxembourg market, and high-net-worth individuals will keep on coming to Luxembourg.

Amaury Evrard, partner and Luxembourg Real Estate Leader at PwC Luxembourg said:

“The real estate market will take advantage of the good economic health of the country. However, real estate players have also to make efforts to use the momentum. They have to take into account the fundamental trends that will shape the real estate landscape in the coming years, such as the changes in society and demography, the needs of the new comers, the impact of the new technologies and the ongoing property price increase.”

According to the report, the real estate market currently meets the main criteria to attract new institutional and private investors, but some of them are still reluctant to come. Local players therefore need to adjust to the expectations of these new investors’ needs.

Kees Hage, partner and Global Real Estate Leader at PwC Luxembourg, commented: “A positive future lies ahead of the real estate in Luxembourg, provided some efforts and changes are addressed. The coming years will be critical and the main players, together with the government, have to take actions to accommodate and steer the pace of the real estate growth.”

You can download “Luxembourg Real Estate 2020: Building blocks for success” on PwC Luxembourg website.