Brexit bankers may find home in Luxembourg’s red-light district
Luxembourg’s red-light district could soon be a home for bankers escaping Brexit.
As the Grand Duchy prepares to welcome financiers relocating from the UK, a lack of housing has pushed the price of relatively modest family homes beyond the ^1-million mark ($1.2 million).
That’s led to edgier areas being developed to keep up with demand, according to real estate brokers in the tiny country, attracting City of London firms looking for a foothold on the continent.
“These days, all neighborhoods in Luxembourg are being explored,” said Julien Pillot at estate agency Inowai SA. 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-goarea populated by drug pushers and pimps. Fifty-seven flats out of about 150 in total are planned to be ready before the summer, according to the project’s website, which features busy young people walking with their children and others driving Lexus, BMW and Mercedes cars. About 70 per cent 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 and ^869,734.
Just around the block, ING Luxembourg SA recently took over most of the office space in another major project right opposite the train station that was finalized in 2017. It includes 31 apartments where some of its staff will 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 European Union. 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 doesn’t 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.
“Prices keep increasing,” said Angelique Sabron of brokers JLL Residential. 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 will pay for a two bedroom flat at most, brokers said.
The upward trend in Luxembourg contrasts with London, which has seen a Brexit-fueled downturn in its sky-high rents and property prices.
The nation’s housing prices rose 4.9 per cent in the last quarter of 2017 from a year earlier, according to statistics published by Luxembourg’s Statec in February. The average price for a house is just under ^650,000. This rises to about ^1 million for a house in the center of the country, roughly double of what a house would cost in the north.