Can I live here, please - but only for a limited period

Luxembourg business leaders gave the Grand Duchy only 1.3 points out of a maximum of five for the category access to housing in 2022. The Economic Barometer of the National Chamber of Commerce was conducted for the eighth time and asked a total of 611 businesses with at least six employees to give their opinion on various topics last September. The area that the CEOs surveyed rated as least competitive compared to other countries was housing.

Even before the turnaround in interest rates last year, the situation in Luxembourg's real estate market was tight. According to the Organisation for Economic Co-operation and Development (OECD), the Grand Duchy is one of only six countries in the world where the number of dwellings per thousand inhabitants did not increase between 2011 and 2020. Higher interest rates, rising rents and declining building permits are currently not helping to change this or the aforementioned assessment.

Maintaining the attractiveness of the country

This is a growing obstacle for companies with foreign workers, as they depend on their employees being able to live in Luxembourg. The impact that the concerns of the local real estate market have on the development of  Luxembourg's economy must be taken seriously, warns Max Rosen, Junior Economist and responsible for housing issues at the Chamber of Commerce: "Businesses that do not own their premises will be hit first and foremost by the increase in rents. The same happens with their employees, who subsequently demand a higher salary. In addition, there are index tranches and the demand of the Chamber of Labour and syndicates for an increase in the minimum wage. All this puts a lot of pressure especially on small to medium sized companies who, thus, find it difficult to stay competitive."

Especially with regard to the increasing shortage of skilled labour in Luxembourg, affected businesses are thinking about how to improve access to housing, Rosen explains. While companies – and not only them – agree on the need to build more in order to offer more, suggestions are also being heard that go in other directions. One idea, also raised by the UEL (Union des Entreprises Luxembourgeoises, umbrella organisation of employers' organisations) for the parliamentary elections in its Sustainable Talent brochure, is that of introducing a mobility and housing premium for young workers.