Geopolitical tensions, inflation, rising interest rates, economic slowdown, indexation… The unfavourable environment for real estate markets has reduced the confidence of occupiers and investors. But Luxembourg is expected to be more resilient than other European markets. And if 2026 faces a historically low investment volume, the real turning point will be in 2028-2029.
“Widespread volatility and multiple geopolitical and economic uncertainties have undermined business confidence,” says Jonathan Morand, Head of Office Agency at JLL Luxembourg.
“Occupier demand for offices fell by 50% in the first half of 2026, to 51,789 m², with an average transaction size of 602 m² compared to 1035 m² over the period 2021 – 2025,” he details. And over the period, “rental vacancy also decreased, to 3.6% compared to 3.9% at the end of 2025, although well below the European average of 9.5%”.
As a result of this very low availability, rents rise again: “The relatively limited supply in new office projects is putting rents under pressure, but this is not the only explanation,” adds Pierre-Paul Verelst, Head of Research BeLux at JLL. “The requirements in terms of energy efficiency have had an impact on the increase in rents.”
In this context, prime rents have increased, with an average of €43 per m² per month (excluding VAT), an increase of 4.9% and a new CBD record of €55.
A resilient market
“Nevertheless, the Luxembourg office market should demonstrate greater resilience than that observed in many European markets,” says Sébastien Bequet, managing partner of Cushman & Wakefield Luxembourg.
“Companies remain cautious in their real estate decisions and are prioritising the optimisation of their space rather than expansion. On the other hand, the “flight to quality” phenomenon is expected to continue to increase. Users are increasingly looking for buildings that meet the highest ESG standards, offer excellent location, optimal accessibility and an attractive user experience for their employees.”
What investors expect
A survey by Inowai conducted in January and February 2026 before the Iran-US conflict shows that investors are approaching 2026 with cautious optimism, supported by stabilising prices and improving financing, with no clear recovery: “This is a repricing and repositioning phase,” the survey explains. “76% of respondents place Luxembourg as a primary or opportunistic market, especially family offices (70%).”
Offices (61%) and residential (56%) remain the most sought-after segments, followed by value-add strategies (+7 points vs. 2025). “Student living (37%) and co-living (27%) are leading alternative assets.” Nearly 70% plan to invest more than €10 million, with an increase in tickets >€50 million (+12 %), » the survey adds. And “75% prioritise the ESG compliance of their assets; 18% (+8 points) and accept a premium for certified assets. »
“Investors are no longer only looking for a return, but also for protection against regulatory, energy and rental risks,” Sébastien Bequet explains. “Capital remains available but is invested much more selectively than before 2022.”
A turning point expected in 2028-2029
For Pierre-Paul Verelst, investors are rarely not risk-averse: “Buyers are often looking for absolute security. And banks are very reluctant to finance transactions involving buildings that do not have a ‘100% safe’ profile,” he says.
Hence, 2026 will record a historically low volume, despite the support of own-use purchase transactions, concludes the JLL expert.
However, the real turning point in the market is expected for 2028-2029, “when several major institutional and private occupiers will simultaneously put large areas on the market that are currently occupied,” Sébastien Bequet predicts. “Probably, at that time, the Grand Duchy will face its first real test of balance between supply and demand.”
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