Given the still hesitant recovery of the housing market and the growing interest in Prolog Luxembourg S.A., the support mechanism's shareholder banks have decided to extend its activity until 31 December 2025.
An innovative response to market demand
The Prolog Luxembourg S.A. initiative was launched at Logement's Dëch on 22 February 2024 in consultation with all stakeholders in the sector. Its founding shareholders are Spuerkeess, Banque Internationale à Luxembourg (BIL), Banque Raiffeisen, Banque de Luxembourg and Société Nationale de Crédit et d’Investissement (SNCI).
Operational since July 2024, the mechanism aims to unlock real estate projects that are in the commercialisation phase but whose construction cannot start due to insufficient pre-sales.
In December 2024, in response to market expectations, adjustments were made to the initiative. The minimum pre-sale rate required to be included in the programme was reduced from 50% to 30%. In addition, application fees were adjusted so as not to penalise smaller projects.
These adjustments have revived the interest of some developers in the banks' initiative to support the property market. In addition, the banks have proactively contacted their customers who had initially expressed interest but had not followed up due to the pre-sale rate being considered too high.
Four applications accepted since April 2025
Prolog Luxembourg SA has made four formal offers to developers for options to purchase apartments with a total sale price of nearly EUR 16.5 million including VAT. These options to purchase relate to real
estate development projects with a total value of EUR 43 million including VAT. One application is currently being finalised.
By way of comparison, the total financial volume of all off-plan sales (VEFA) in Luxembourg in 2024 amounted to EUR 579.6 million, with off-plan purchases by the State and the City of Luxembourg
accounting for 54.5%.
The recovery remains fragile
Confidence in the off-plan sales market improved over the first four months of this year, but the situation is far from back to normal, even with the European Central Bank (ECB) announcing the end of its cycle of lowering key interest rates and the end of state aid for investors in Luxembourg.
At the end of April 2025, industry professionals reported an increase in the number of deeds for off-plan apartments sold. However, these sales remained significantly lower, by more than half, compared to the
period before the crisis, i.e. the years 2020 to 2022. (source RTL: https://www.rtl.lu/radio/invite-vunder-redaktioun/a/2313875.html.)
A mechanism that stays relevant
Considering the current market difficulties, but also the gradual resurgence of interest in this unique mechanism, the shareholder banks have decided to extend the initiative until 31 December 2025.
Beyond this date, Prolog Luxembourg S.A. will no longer issue put options.
The shareholder banks remain convinced that this vehicle meets the current needs of the market. What's more, it is more favourable for developers than keeping projects awaiting commercialisation on
their balance sheets. Furthermore, it is the only mechanism currently in place on the market that combines two important levers:
launching the construcjon of a project once 30% of pre-sales have been achieved, while ensuring a secure complejon for both the buyer and the developer.
and (subject to acceptance of the applicajon by the credit insjtujon concerned) to provide the developer with complejon guarantees issued by a trusted bank in Luxembourg and the necessary liquidity via a construcjon loan in order to complete the construcjon of the real estate project.
Communicated by ABBL