“Now is the time to buy”: three initiatives to support real estate in Luxembourg

The recovery has been slight since 2023, but it is not enough. The Luxembourg real estate market continues to suffer, as evidenced by the multiplication of bankruptcies in the construction sector, logically accompanied by an increase in unemployment for workers in the sector. A situation that it is becoming urgent to redress. “We are very worried about the situation,” said Max Didier, president of the developers section of the Real Estate Chamber, during a press briefing on Tuesday, January 21.

While the drop in interest rates combined with that of real estate prices as well as government measures allowed buyers to return to the market, the latter were mainly interested in housing already built. Transactions relating to sales in a future state of completion (VEFA) thus recorded a drop of 80% compared to their historical average over the years 2017 to 2021, according to Statec figures.

The reason: the lack of confidence of potential customers. The latter “were frightened by the problems encountered by certain builders,” said Jean-Paul Scheuren, spokesperson for the developers section of the Real Estate Chamber. If a recovery in VEFA sales was observed during the second half of 2024 (+48% of transactions compared to the first half), transactions still remain far from the observed averages.

A charter for real estate developers

To restore this relationship of trust between real estate developers and potential buyers, the Real Estate Chamber has developed a new tool. The latter takes the form of a website, called “charte.lu”. “The idea of ​​this charter is to reassure the public by being more transparent,” summarizes Jean-Paul Scheuren.

Already signed by around twenty promoters, like Prefalux, Perrard, Kuhn, and Thomas&Piron, this document commits them on several aspects. Signatories are notably required to provide greater transparency to their clients in terms of completion and reimbursement guarantees, but also in terms of price. They also commit to meeting completion deadlines and offer more details on the ten-year and two-year guarantee.

Designed to become a guarantee of quality and trust, the charter logo will be displayed on all partner real estate portals. “In the event of non-compliance with the various commitments, the signatories of the charter are exposed to sanctions which will take the form of a complaint procedure via the Real Estate Chamber. Sanctions can range from reprimand to withdrawal of the promoter’s signature,” explains Jean-Paul Scheuren.

A suitable financial support mechanism

Is this document enough to restore buyer confidence? For the spokesperson for the developers section of the Real Estate Chamber, it is a “starting tool”. More broadly, “the entire sector must react and adapt to the situation by putting the customer at the center of its concerns,” believes the professional. In place since July 2024, another initiative aims to boost the construction of new housing in the Grand Duchy. A necessity, in the eyes of Jean-Paul Scheuren, who considers that “as long as we do not achieve a sufficient level of production of new housing, rents will continue to increase”.

This is Prolog Luxembourg SA, a support mechanism supported by five banks: Spuerkees, the International Bank of Luxembourg, Raiffeisen, the National Credit and Investment Company and the Bank of Luxembourg. Concretely, banks offer support to real estate developers whose projects do not attract enough buyers. As a reminder, properties must achieve a minimum of 80% pre-sales to begin construction work. A rate that is difficult to achieve given the economic situation.

Previously raised to 50%, the pre-sales rate necessary for a real estate project to benefit from this mechanism has been reduced to 30%, in order to better take into account the reality of the market. “For the moment, only one file has been accepted by the Prolog system. This is why various criteria have been relaxed and the system renewed until June 30, 2025,” explained Jerry Grbic, CEO of the ABBL. But no extension is planned beyond this date.

Technically, the system allows banks to acquire the portion of housing in the project that cannot find a buyer at a price discounted by 20% compared to the market value. The financial commitment thus allows the developer to commit to the project, and ideally to sell these homes at an attractive price during the duration of the work. If certain housing units have still not won over buyers at the end of the project, the bank acquires them at the agreed price, then the units are resold to civil society actors. According to the leaders of the initiative, it will allow the placing on the market of 800 to 1,300 housing units.

A site that centralizes all help

To help first-time buyers and investors take the plunge, the aides.lu site lists all the assistance to which buyers are eligible. “We find that our customers can be a little lost and do not necessarily know the extent of the assistance to which they are entitled,” underlines Jerry Grbic.

Interest subsidy, housing VAT, tax assistance or even acquisition assistance, the site, launched in November 2024, centralizes all useful information for buyers. It is particularly useful for preparing for an interview with your banker before a discussion on a real estate loan, as users can simulate their investment capacity.

These different initiatives towards buyers only reinforce the point of view of professionals: “it’s really the time to buy”, believes Max Didier. For his part, Jean-Paul Scheuren “invites customers to see what is on the market”, and underlines the diversity of offers, which positions buyers as negotiators.