A first in a decade. Rents in Luxembourg have fallen by an average of 5% over the last twelve months, according to the latest market data. A trend that impacts the strategies of landlords.
The Drop in Numbers
The fall in rents affects the whole territory, with variations by zone.
Luxembourg City is seeing an average drop of 4%. The near suburbs show a 5 to 6% decrease. Rural areas are less affected with only a 2 to 3% drop.
This decrease mainly concerns 2 and 3-bedroom flats, the segment most affected by market developments.
Reasons for This Drop
Several factors explain this historic development.
The increase in rental supply with many new developments delivered in recent months has widened choice for tenants.
The drop in interest rates has pushed some tenants towards purchasing, freeing up properties on the rental market.
The return to partial office working has reduced demand for large flats near the centre.
The Impact for Landlords
This drop in rents has several consequences for landlords.
Rental yield is mechanically decreasing. To compensate, some landlords are investing in renovation to justify higher-than-market rents.
Vacancy is increasing for unrenovated properties. A flat with a poor energy passport rents slower and for less.
Renovation as a Response
In this context, renovating your rental property becomes a relevant strategy.
Improving the energy passport allows you to maintain an attractive rent while reducing charges for the tenant.
Modernising the kitchen and bathroom attracts tenants willing to pay a premium for a quality property.
Klimabonus grants remain accessible to landlords, reducing the investment cost.
Find tradespeople to renovate →
FAQ
Will rents continue to fall?
Analysts predict stabilisation rather than a continuing drop. Luxembourg remains a tight market with structurally strong demand.
Should I lower my current tenant’s rent?
Not necessarily. An existing tenant often prefers stability. However, when changing tenants, the new rent will need to reflect the market.
Are Klimabonus grants accessible for a rental property?
Yes, landlords can benefit from grants to improve the energy performance of their rental property.
