The VDL has purchased a number of single-family homes in Hamm, in addition to their 60-million-euro real estate projects in Dommeldange.

Much like the Luxembourg government, the Luxembourg City municipal council is also investing in private housing projects.

On Thursday, it was revealed the municipality had purchased seven detached properties worth 6 million euros in Hamm from the Stugalux construction company. The houses are part of 17 properties within the "Baulückenprogramm", a project which identifies vacant land and mobilises it for housing construction. No buyer was found for seven properties, so the council stepped in to ensure the houses were built.

Alongside these properties, representatives from the municipality signed a reservation contract with promoters Immobel on Thursday morning. In return for the 60 million euro investment, the capital will receive 25 apartments and 92 rooms belonging to the "River Place" development in Dommeldange, with the former available for rent and the latter to be rented out as shared accommodation. It is not yet known whether the council will be reimbursed up to 75% by the government, alderman Laurent Mosar said, as the Housing Pact 2.0 remained ambiguous on this point.

Mayor Lydie Polfer said the investment was designed to combat the lack of housing, as well as boosting the construction sector. The sales before completion of the properties (also known as VEFA, or 'vente en état futur d'achèvement') date back to last year's call for tenders, in which one of the conditions was that the price should exceed no more than 4,000 euros per square metre for the land and no more than 5,800 euros per square metre for the building. The development in Dommeldange therefore meets this requirement, costing less than 10,000 per square metre, according to Immotop.

Immobel Luxembourg director Muriel Sam said the project delivered a "very thin margin" and explained it wasn't likely to make much money, but that the company had decided to pursue the development in light of the current crisis within Luxembourg's building sector. The project would deliver liquidity and help ensure employment, she added.

In total, Luxembourg City council received 15 offers following their call to tender, but just five projects met the required conditions. The Immobel project is the first to receive a concrete offer, while discussions are still ongoing with the remaining four.

Polfer said the municipality did not immediately intend to re-issue the call for private projects, but could not rule it out in future. The Luxembourg City mayor said she hoped the market would recover soon, as the government and municipal councils could not meet the need for housing alone.