As Mipim approaches, Paperjam is offering a two-part series to decipher the state of the Luxembourg property market through two complementary perspectives: that of an institutional player and that of a professional in the field with the CEO of IKO Real Estate, . Same questions, but different analyses.
Beyond networking, what does Mipim “measure”? What does Mipim mean to you?
. —“Mipim represents an essential opportunity for companies to strengthen their contacts and clearly support their business. Over and above this relational aspect, Mipim remains the essential meeting place for companies to keep abreast of new market trends. The pavilion demonstrates Luxembourg’s attractiveness in the property sector, and the inherent qualities of stability and visibility that we can offer potential investors in the sector. It’s a great showcase that we must seize, to promote more generally an image of Made in Luxembourg excellence internationally and with local players.
Why do you think it is important for Luxembourg to be present at Mipim this year?
“With no fewer than 19 participations at Mipim, Luxembourg is showcasing its real estate assets through its national pavilion. Our aim is to highlight the wealth and diversity of Luxembourg players and projects, capable of providing innovative responses to the sector’s many challenges.
Our presence federates the real estate ecosystem and helps turn conversations into projects. The sessions organised by Luxembourg professionals, both at Mipim and elsewhere, are traditionally a great success. This edition will offer a unique opportunity to reach an investor audience that is not yet familiar with Luxembourg, thanks in particular to the ‘Geofocus Stage’, one of the four major stages, where the country will benefit from an hour of visibility dedicated to the Benelux region.
Is there a gap today between the discourse on real estate and the reality on the ground?
“A certain gap can indeed be perceived between the progress initiated and the impact that has yet to be felt. The government has encouraged the revival of the sector with legislative measures, in particular by supporting the supply of affordable housing and simplifying administrative procedures. These initiatives demonstrate a firm desire to respond to current challenges, which we at the Chamber of Commerce welcome. Nevertheless, their impact has yet to be confirmed in practice: the market is still struggling to get going again, and their effectiveness will have to be assessed against the test of implementation.
A major point of attention remains the role of the private sector, which is too often excluded from the schemes even though it plays an essential role in meeting structural housing needs. This participation is essential to guarantee sufficient volume production.
The property market is recovering at two speeds. On the one hand, the existing property market is showing very positive momentum: in the second quarter of 2025, transactions in existing properties rose sharply [+72.9% for flats, +93.7% for houses], and the banks recorded an increase in new mortgages in the autumn, even after the tax measures expired on 30 June 2025. On the other hand, new construction remains in difficulty: sales under the ‘Vefa’ scheme remain well below the levels seen between 2017 and 2021, with no real prospect of an end to the crisis in the short term, according to professionals.
There is an urgent need to get the private sector more involved and to continue efforts to give new construction a concrete boost.
Relaunching new construction is, therefore, a strategic challenge for the future of Luxembourg. The aim is to meet demand in the long term and avoid a growing imbalance between needs and available supply. The figures illustrate this problem: while the country needs 6,000 to 7,500 new homes a year, the average production between 2009 and 2020 is only 3,282 units a year. In 2024, the number of building permits for the first nine months was 2,609, compared with 3,517 for the same period in 2023. In addition, sales of buy-to-let flats remain well below the average for previous years, with just 790 units in 2024 and 926 units in the first three quarters of 2025, a far cry from the average of 2,854 flats sold between 2017 and 2021.
To meet expectations and ensure balanced development of the sector, it is urgent to involve the private sector to a greater extent and to continue efforts in favour of a concrete boost to new construction.
Between rising interest rates, the cost of construction and ESG requirements, are we witnessing a structural crisis in real estate or an adjustment after years of euphoria?
“On the interest rate front, the sector is above all seeing a readjustment. While it was hoped that the European Central Bank [ECB] would cut rates in the near future, which would boost demand for mortgages, international monetary developments are upsetting the outlook. The recent appreciation of the euro against the dollar [by almost 14% over 2025] is reshuffling the deck, prompting the ECB to maintain its key rates at 2%. Any fall too fast could in fact weaken the export competitiveness of European companies, adding further complexity to a context already marked by high construction costs and increasingly structuring ESG requirements.
The State has increased its strike force on the creation of affordable housing, but there is a structural adaptation of the sector that must also come from the real estate players.
With regard to construction costs, the dynamic remains marked by cyclical factors: after a spectacular surge in the prices of concrete, ceramics and other materials in 2022, stabilisation is slow in coming. In mid-2025, a slight rebound was even seen, testifying to a slow and gradual normalisation of the market.
Against this backdrop of gradual improvement, the recovery in the property sector appears nuanced. According to the latest Statec figures, Luxembourg banks have recorded a 25% increase in mortgages granted compared with 2024, while sales of existing properties are returning to levels close to those seen before the health crisis. The State has increased its strike force on the creation of affordable housing, which the Chamber of Commerce had welcomed, but there is a structural adaptation of the sector that must also come from the real estate players.
A recently showed a construction sector lagging behind other industrial ecosystems in terms of innovation. What’s more, the survey also shows that despite progress, it is also the worst performer when it comes to tangible and projected investment in digitalisation. It would appear essential for the real estate sector itself to embark on a profound transformation, particularly in terms of digitalisation.
Changes in the construction price index (annual variation in %). (Source: Statec, building price survey)
Is Luxembourg still attractive for international real estate today?
“Political and social stability are very important factors and especially in the current context. International rating agencies have rating that Luxembourg shares with only a few nations in the world. Population growth, on the other hand, still evokes great dynamism. We benefit from a leading international financial centre, a popular multicultural environment and the long-recognised quality of the developments carried out by Luxembourg’s construction players.
As in previous editions, the presence at the show of other sectors, such as lawyers, consultants and banks, means that a complete value chain can be presented, offering the expertise needed to structure the investment vehicles that are essential to bringing real estate projects to fruition.
These solutions can also be promoted during the Benelux geographical focus on the main stage on the first day of Mipim, with a themed round table around capital flows and investment strategies.
When you talk about Luxembourg in Cannes, what is it that still attracts interest from investors?
“Luxembourg’s advantages need to be better known by many potential partners and investors. Those who discover them generally appreciate the stable nature of the institutions and the very good local infrastructure, made possible by the investments made by the government. The country remains attractive to businesses and benefits from its central location at the heart of Europe, where investors are securing a prime position with one of the highest rates of economic openness in the world.
Has the environmental transition become a real factor in creating value in real estate, or does it remain primarily a costly regulatory constraint?
“The situation here is neither black nor white. It’s true that regulatory constraints in terms of energy performance requirements and the extensive environmental studies required for certain projects can be hard on the ground and erode profitability: balance sheets that are harder to complete, delayed projects and a rise in construction prices in recent years that doesn’t help. We are working hard to avoid any over-regulation, and thus any additional competitive disadvantage in an environment that has to deal with a lot of constraints.
In terms of new uses, we are seeing more and more flexible rental products likened to ‘coliving’.
However, It should also be pointed out that some players have managed to turn constraints into opportunities by developing . I’m thinking of property developers who have taken the lead in imagining ambitious brownfield redevelopment projects, neighbourhoods that are at once desirable, boasting higher levels of density and performing well from an environmental point of view. Combined with a construction sector that is gradually moving towards low-carbon materials, the circular economy and modularity, there is a new vision of real estate that can create value. And then, adopting more sustainable practices will help businesses in the long term to become more robust, face new crises, and display greater resilience in the face of unforeseen shocks.
Do you see new real estate uses or needs emerging that were not noticeable five years ago?
“In terms of new uses, we’re seeing more and more flexible rental products assimilated to ‘coliving’. Unlike colocation, which we have known for a long time, here we have individual leases and service management provided by companies that are starting to set up in the Grand Duchy. This solution meets a need for mobility and flexibility among young workers in certain sectors and, in a context where the crisis has increased the insolvency of some households, it has naturally found an area of emergence. This model, which is highly optimised from a lettable m² to built m² point of view, offers yields that are compatible with capital expectations, [developers having acquired their land at high prices while preserving their margins, editor’s note].
Office property is also showing remarkable resilience here, with one of the lowest vacancy rates in Europe.
Other developments that we are seeing emerge more and more are companies that, taking matters into their own hands, are making accommodation available to their employees, in order to remain attractive and attract talent who would otherwise sign a contract elsewhere in the absence of housing options! In this sense, we could imagine more flexibility being granted to the private sector so as not to exclude them from the affordable housing segment. The free allocation to employees of affordable housing built by companies would fulfil a dual objective of attracting and retaining talent, while bringing them closer to their place of work, as the distance between home and work is increasingly holding back potential workers from settling in.
Which property segments are currently holding up best in this uncertain environment?
“We could mention logistics assets, digital infrastructures such as data centres which, incidentally, are benefiting from privileged exposure this year at Mipim, and older residential property, where activity has picked up strongly with sales volumes back to pre-crisis levels. Office property here, with one of the lowest vacancy rates in Europe and rents remaining stable, underpinned by demand concentrated on the highest-quality, well-serviced buildings. In contrast, the buy-to-let market and new residential property more broadly, which is still struggling badly and remains a long way from its pre-crisis standards.
Number of existing flat sales and corresponding financial volumes, since 2010. (Source: Fichier de la publicité foncière, Statec, Observatoire de l’Habitat)
The situation is complex and the result of many factors, but it is essential to tackle this problem resolutely, as the housing deficit accumulated each year in relation to the country’s needs is weighing heavily on the economy. The possible reinvention of the Vefa model, , will require a transitional phase. In order to move forward, banks will need to facilitate the financing of Vefa projects by accepting a lower reservation rate for lots than is currently required. In addition, the crisis and recent bankruptcies are making buyers more cautious, encouraging them not to invest their entire savings in off-plan properties. Finally, the question of a reduction in VAT is all the more acute given that Belgium has lowered its rate to 6% to support its construction sector, a measure that could be relevant given the current emergency.
Number of sales of flats under construction (Vefa) and corresponding financial volumes, since 2010. (Source: Fichier de la publicité foncière, Statec, Observatoire de l’Habitat)
By 2030, what do you think will be the main paradigm shift for real estate in Luxembourg?
“The real estate sector could undergo a major transformation, driven in particular by the European Housing Strategy. If national and European ambitions become reality, we can expect to see an improvement in timescales, a complete digitalisation of permit procedures, as well as increased funding to encourage innovation and the development of sustainable, affordable and high-quality housing projects. Today, the housing crisis is weighing on the country’s competitiveness, affecting social cohesion and limiting professional mobility and access to education and training.
With this in mind, it is essential for the measures to bear fruit quickly, enabling an increase in skills and adaptation to the sector’s new needs. The stakes are high: the aim is both to retain construction professionals, some of whose projects have ground to a halt, and to respond to a widespread labour shortage. The European Union is responding with two priorities: the Skills Pact to upgrade and retrain three million professionals a year by 2030, and an attractiveness strategy to rejuvenate the sector and attract more women, in particular by adapting training to the emerging requirements of sustainable and digital construction.”
This article was written for the of Paperjam magazine, published on 26 February. The content is produced exclusively for the magazine. It is published on the site to contribute to Paperjam’s comprehensive archive. .
Is your company a member of Club Paperjam? You can request a subscription in your name. Please let us know via .