Co-living spaces have become increasingly popular in Luxembourg in recent years but are they truly a viable solution to the housing crisis?

While several French cities have heavily pushed back against the phenomenon, co-living continues to gain traction in Luxembourg. Although it arrived late to the Grand Duchy in 2007, co-living has carved out a niche in a permanently strained housing market. The appeal? High rental yields, a defined target audience, and services tailored to young professionals.

But what exactly is co-living? According to Luxembourg Institute of Socio-Economic Research (LISER) researcher Constance Uytebrouck, who specialises in the topic, it is a "flexible rental product" offered by "specialised professional companies". The model is similar to flat-sharing, offering furnished rooms with shared common areas, typically including the living room, kitchen, and sometimes the bathroom.

However there are two key differences between flat sharing and co-living, with the first one being contractual. All occupants have individual leases and benefit from services "ranging from cleaning of common areas to the organisation of events for the community". Companies promoting this housing model claim to address an "inevitable" need in a market described as overly rigid and even "dysfunctional".

While the rigidity and even viability of Luxembourg’s traditional rental market may be open to debate, one key claim often made by co-living companies, which is that of affordability, has been debunked by Uyttebrouck: "Rents per square metre are generally higher than on the market, especially for small spaces and even more so for short-term rentals," she explains.

Flexibility, however, typically comes at a premium. The shorter the stay, the higher the cost. This is how the co-living model is more comparable with that of the hotel industry. So far, co-living communities in Luxembourg have largely been established in apartment buildings, but that is beginning to change. Several new projects have been announced in the last three years.

"The sector is increasingly developing along the lines of 'build to rent'," says the LISER researcher, which could further contribute to declining home ownership rates. While it remains a niche market in the Grand Duchy, that could slowly be changing. The arrival of international companies such as Habyt signals a growing interest from investors turning away from an increasingly non-viable traditional rental market.

This, in turn, raises questions about whether regulation of the emerging co-living sector in Luxembourg goes far enough. High-density living, multiple offerings under one roof, and bundled services: is co-living compatible with Luxembourgish law, or does it create loopholes that certain players could exploit? That’s the concern voiced by critics across the border.

In addition to siphoning off part of the housing stock, co-living units are also said to contribute to rising rents. Associations such as Paris: zero co-living have launched appeals to cities that have not yet adopted the model, urging caution. Particularly for Luxembourg, this call comes at a time when Luxembourg is experiencing a surge in tenant evictions.

For her part, Constance Uyttebrouck warns of the risks of social exclusion, as some companies in the sector explicitly target what they call premium tenants. She also pointed to the current gaps in the legal framework which should remain under constant review. As we understand it, one operator, active in Luxembourg for several years, has already encountered "minor problems" with some municipalities.

For more on Luxembourg's housing crisis and how the phenomenon of co-living is evolving in Luxembourg and beyond, check out RTL Play, Apple Podcast et Spotify, with episodes available in French.