Why building is expensive here

Regulatory requirements. The energy standards applying to new construction are demanding, and they entail technical choices and equipment that are matters of compliance rather than comfort.

The cost of skilled labour. Wage levels and the automatic indexation in force in Luxembourg place labour costs above those of neighbouring countries.

Pressure on firms in the sector. Sustained demand and a limited number of players reduce downward competitive pressure on prices.

Site constraints. The frequent tightness of plots, municipal rules and access conditions in urban areas make organisation more expensive.

Those four causes accumulate rather than offset one another, which explains the persistence of the observed level.

Structural cause	Effect on cost	Actionable
Scarcity of land	High land price	No
Labour costs	High works cost	No
Regulatory requirements	Heavier technical items	No
Brief and specification	Area and finishes	Yes

Three items largely escape negotiation, and knowing that saves time. They concern land, labour and standards.

Regulatory requirements, imposed on the project rather than on the parties. Lowering them is not a lever; it is non-compliance.

Labour costs, determined by the national social framework.

The general market price level, which an individual client does not change.

Attempting to act on those three generally degrades quality rather than reducing cost.

Four levers, in decreasing order of effect. They bear on the brief, the form, the specification level and the programme.

Location, by far the first, as the article on why land dominates the budget explains.

Compactness of the building. A simple volume reduces envelope areas, junction lengths and execution complexity at equal living area.

The brief. The area genuinely needed is the most direct lever on construction cost.

Finish level, real but more limited than clients assume, since it bears on only part of the works budget.

These levers are detailed in the article on what changes the works cost. Their respective effect is quantified there.

Three reasons, and they recur constantly in discussion. They explain the gap with neighbouring markets.

Technical requirements are not the same. Comparing a Luxembourg price per square metre with a French or German one without comparing the applicable standards means comparing two different products.

Labour costs differ structurally, and they represent a significant share of the works price.

The scope of quoted prices varies. Depending on country and practice, a price per square metre includes or excludes different items.

A foreign firm working in Luxembourg does not mechanically apply its home prices there, precisely for these reasons. Conditions of practice belong to the corresponding guide.

Two practical consequences.

Foreign references are not transposable. An estimate must rest on local references, or on quotations.

The high level calls for a more disciplined contingency. On a high unit cost, a deviation of a few per cent represents a significant amount, which makes accuracy in estimating all the more useful.

This is covered in the article on estimating before a design exists. The method is detailed there.

Four rules.

Explain what is not negotiable, rather than allowing hope of illusory savings.

Direct decisions to the real levers, location, compactness and brief before finishes.

Refuse unqualified international comparisons, or qualify them explicitly.

Use local references, foreign ones producing false estimates.