Luxembourg City rents most expensive of any European capital, study shows

Luxembourg City has the most expensive rental market of any capital in Europe, according to a survey by Big Four firm Deloitte.

Tenants in the Grand Duchy’s capital paid an average of €43.40 per square metre in monthly rent last year, far higher than in Paris (€32) and Dublin (€31.70), the next most costly cities, the latest Deloitte Property Index survey released last month showed.

Rents on new leases rose 16% year-on-year, while in stark contrast the cost of existing contracts increased by just 1.7%, roughly in line with inflation.

The financial firm’s report highlighted this gap as evidence that newcomers bear the brunt of rising costs, while long-term tenants are somewhat shielded from major price jumps.

Luxembourg most expensive country for buyers of new flats

Luxembourg is also the most expensive nation in Europe for buyers of new residential property, out of 30 countries analysed, which included Turkey and Israel.

In 2024, buyers in the Grand Duchy paid an average of €8,760 per square metre for a newly built flat, placing the Grand Duchy ahead of Israel (€6,131), the United Kingdom (€5,203), Austria (€5,053) and Portugal (€5,049).

The report noted that the Luxembourg figures are “based solely on” flats rather than houses, and the “relatively small sample size may influence the final value”.

In the capital, the cost is even higher. A newly built flat averaged €11,074 per square metre, making the capital the second-priciest market out of 75 cities surveyed, behind only Tel Aviv, at €13,970.

Although prices in the city slipped 2.5% compared with 2023, they remain 126% higher than the average across the cities in the survey. Munich (€10,800) and Paris (€10,760) also crossed the €10,000 threshold.

Deloitte attributes these high price levels to a mix of strong demand, limited supply of building land and persistently high construction costs.

The report notes that major hubs such as Luxembourg City, Paris and Munich concentrate economic activity, jobs and wealth, driving both buyers and renters into already tight markets.

Fragmented market across Europe

The study also points to diverging trends across the bloc. While Luxembourg’s flat prices fell by 3.4% in 2024, other markets saw double-digit increases.

Poland led with a 19.3% rise, followed by Albania (+16.5%), Hungary (+11.9%), Croatia and Romania (both +11.5%), and Italy (+11.2%).

By contrast, Turkey recorded the sharpest decline, with average prices dropping 12% after years of rapid growth.