Insight into Construction in Luxembourg by the European Construction Sector Observatory

Luxembourg’s construction sector weathered the economic crisis better than most EU countries, in line with the positive trajectory of the overall economy. Construction productivity peaked in 2011 before falling by 8.0% between 2011 and 2013. Productivity has since begun to recover, growing by 3.7% between 2013 and 2014; however, it still remains below the pre-crisis level. In contrast, the number of construction companies in Luxembourg increased by 15.8% during the period 2008-2013.

The property market in Luxembourg fared relatively well after a slowdown in 2012, with a 7.4% increase in the number of building permits issued in 2013. However, housing supply has not kept up with demand in spite of population increases, leading to challenges in housing affordability, urban sprawls and congestion on the roads. The house price index has steadily increased, going up by 24.8% between 2010 and 2015. To boost construction and improve housing affordability, the government is implementing a series of measures, as part of the Housing Pact, to subsidise investment in social infrastructure by local governments, where there is a predicted population growth of over 1% per year (or 15% over a 10-year period). In addition, the government is also aiming to build at least 2,500 new social housing units by 2025.

Investment in construction fell by 12.4% between 2008 and 2010, in the immediate aftermath of the crisis. Investment then grew by 8.6% between 2010 and 2015, but was still 4.8% below the 2008 level. Investment in sustainable transport is of key strategic importance. Luxembourg’s tram network, LuxTram, is a flagship project that requires an investment of EUR 345.8 million. Luxembourg has also established a number of public Special Funds (Fonds spéciaux), each of which invests in projects under a specific area, such as the Railway Fund (Fonds du Rail).

Luxembourg is a country that embraces innovation, evidenced by the range of construction-related clusters and initiatives that are in place. The Resource Centre for Technologies and Innovation in Construction is a platform that brings together all of the main players in the sector. The Luxembourg Institute of Science and Technology (LIST) promotes the use of Building Information Modelling (BIM). NEOBUILD is an innovation hub that supports and promotes innovation in sustainable construction. The hub provides a range of innovation and business support services to organisations that are developing innovation projects. Services include innovation consulting, coaching and management, building information management (BIM) solutions, and an in-house test laboratory for new products, materials and systems.

The construction industry is also supporting the development of new skills. For example, energy efficient building renovations and the use of renewables in buildings are priority skills areas that are being targeted by initiatives such as LuxBuild 2020.

The outlook for Luxembourg’s construction sector is positive. The sector is expected to benefit from strong demand for residential construction and office buildings, and growth in public spending.

The European Construction Sector Observatory is helping the construction value chain to confront the economic and social challenges that impact the construction industry. Through regular analysis and comparative assessments, the initiative aims to inform European policymakers and industry stakeholders on the market conditions and policy developments in the European construction sector. The key outputs of the Observatory include Country Fact Sheets that profile and analyse the construction sector in each Member State, Policy Fact Sheets on key sector-related policies in each Member State, and a series of Analytical Reports on the implementation of Construction 2020 Strategy objectives.

Visit the Observatory website to download analytical fact sheets and reports on Luxembourg and other Member States, and gain insight into the European construction sector.


Moderated by : Construction21 Team

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