Luxembourg’s red-light district could soon be a home for bankers escaping Brexit.
As the Grand Duchy of Luxembourg prepares to welcome financiers relocating from the UK, a lack of housing has pushed the price of relatively modest family homes beyond 1 million euros (US$1.23 million).
That has led to edgier areas being developed to keep up with demand, attracting City of London firms looking for a foothold on the continent, real-estate brokers in the tiny country said.
“These days, all neighborhoods in Luxembourg are being explored,” Inowai SA real-estate broker Julien Pillot said.
That includes the seedy area of the nation’s capital dubbed Luxembourg City’s answer to the Bronx.
One luxurious project called “Soho” has sprung up around the Rue de Strasbourg, which is slowly shedding its former reputation as a cut-throat, no-go area populated by drug pushers and pimps.
Fifty-seven apartments out of about 150 in total are planned to be ready before the summer, according to the project’s Web site, which features busy young people walking with their children and others driving Lexus, BMW and Mercedes-Benz cars.
About 70 percent in the first project have already been reserved, with a handful of two-to-three bedroom options still up for grabs for between 566,814 euros and 869,734 euros, it said.
Just around the block, ING Luxembourg SA took over most of the office space in another major project right opposite the train station that was finalized last year. It includes 31 apartments where some of its staff members are to be housed.
Luxembourg has already become the nation of choice for several insurers, funds and banks relocating from the UK as it prepares to leave the EU. Insurance giant American International Group Inc, US insurer FM Global, RSA Insurance Group PLC and Lloyd’s of London insurer Hiscox PLC, as well as private-equity firm Blackstone and asset managers such as M&G Investments, have all chosen Luxembourg as their new EU hub. JPMorgan Chase & Co also plans to move some London-based bankers to Luxembourg.
In all, Brexit could create an additional 3,000 jobs with a growing number of companies expected to set up their new EU base there — adding to the demand for houses and apartments.
If sharing the streets with drug pushers and pimps does not appeal, there are other options in Luxembourg City, the nation’s capital — but none is cheap.
The most coveted and most expensive districts of Luxembourg City are Belair, Limpertsberg, Merl and Kirchberg, just a bike-ride or even a walk away from most offices, shops and restaurants. Homes, even the occasional maison de maitre 19th century town house, can easily cost more than 2 million euros for at least four bedrooms.
A million euros might just be enough to buy a new house near the city center, and in the city’s most coveted areas, it would pay for a two-bedroom apartment at most, brokers said.
The nation’s housing prices rose 4.9 percent in the final quarter of last year from a year earlier, statistics published last month by Luxembourg’s Statec showed.
The average price for a house is just under 650,000 euros. This rises to about 1 million euros for a house in the center of the country, about double of what a house would cost in the north.
The trend is pushing more and more people away from the city, even across the border to nearby France and Germany, where cheaper and more spacious housing is still available. It comes at the cost of a nightmarish commute.
While Luxembourg’s housing ministry dismisses the idea of a housing crisis, it recognizes the growing pressure on prices as a result of the nation’s attractive position as a financial-services center.
The net number of people moving to Luxembourg is growing by about 13,000 people every year, said Jean-Paul Marc, first government counselor at the housing ministry.
“That corresponds approximately to 6,000 new homes needed per year and this is what we’re in the process of catching up on,” Marc said.
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