The office market in Luxembourg saw sustained growth in 2021, with a record occupancy of 357,000 square meters and quadrupled deliveries, reaching 214,000 square meters. However, the vacancy rate decreased from 4% to 3.6% year on year, which is half of that in Brussels, due to a scarcity of supply in the Grand Duchy and a pre-leasing and pre-sales rate of 23%. Luxembourgish and European public administrations have largely contributed to this increase, with a predominance of Kirchberg, which represents 45% of the volume delivered, and an increase in the share of Belval to 9%. The highest rents are found in the center/Royal Boulevard at 52 euros/month/square meter excluding VAT, while the capital's outskirts have maintained their rents at 28.5 euros/square meter. A 36% drop in deliveries to 135,468 square meters is expected in 2022, with supply and demand in balance. The investment market has cooled down to 1.2 billion euros in 2021, and real estate yields will be under pressure due to rising interest rates. As for residential real estate, price increases have focused on existing properties, with an annual growth rate of 11% compared to 3% for properties under construction, while the number of building permits increased by 19% between September 2020 and September 2021.