Luxembourg, favoured location for multi-geographical and multi-sectoral REIFs

25 Nov 2022 | Press Releases  


Luxembourg real estate investment fund industry showcases resilience with continued growth.

  • REIFs surveyed grew significantly from last year to 621 vehicles
  • Multi-sector remains the most popular strategy for investors, with a 49% allocation
  • 66% of the surveyed REIFs invest in Europe, whereas 8.2% of funds invest globally, 9.2% in North America and 6.9% in the Asia-Pacific region
  • Larger funds of +€400 million have increased significantly to 37.8%, although smaller funds remain in the majority - 46.7% are sub €100 million

The 16th edition of the Association of the Luxembourg Fund Industry (ALFI) Luxembourg Real Estate Investment Funds Survey illustrates the continued strength and resilience of Luxembourg’s real estate investment sector. This REIF survey confirms that, despite geopolitical uncertainties this year in Europe, Luxembourg remains the favoured location to establish and maintain multi-geographical and multi-sectoral regulated REIFs, which continue to appeal to institutional investors and fund managers from around the world.

Emmanuel Gutton, Director Legal and Tax of ALFI, commented: “Each year the ALFI REIF survey offers a comprehensive overview of the real estate investment fund market in Luxembourg. We are particularly pleased that in the 2022 edition the number of surveyed REIFs continues to increase significantly, reaching 621 vehicles, up 20% compared to 2021. By Q3 2022 CSSF data shows that AuM reached EUR 131.3 bn* which is a 26% increase compared to the same period last year. CSSF data does not include manager regulated REIF, where our statistics in the ALFI REIF survey 2022 confirm that the interest in RAIF has not slowed down, with a total of 172 funds surveyed, compared with 134 in 2021. It is encouraging to see that no significant special situations have been reported over the period surveyed. The REIF market seems resilient although the impact of geopolitical uncertainties is yet to be seen.”

(*) Source: CSSF/ ALFI, net assets under management of Luxembourg investment funds (Part II funds and SIFs) as at 30 September 2022

Christophe Masset, Real Estate Tax Partner at Deloitte Luxembourg and Co-Chair of the ALFI REIF Survey working group, added: “The real estate fund industry is currently facing a challenging economic context. However, the 2022 ALFI REIF’s survey demonstrates that the REIF industry has shown great resilience with a significant growth of the net Assets under Management which have increased by c. 26% over the last twelve months bringing the total assets under management to EUR 131.3 billion. Bigger funds appear more prevalent in 2022 with REIFs having a NAV above EUR 100 million representing now 53% of the surveyed REIFs and multisector diversification is continuing. This demonstrates once again the resilience and attractivity of the REIF market.”

Other topics and findings of the research were:

  • New launches: New funds have been launched overwhelmingly by initiators from Europe (mainly Benelux, Germany and the UK) and from the US.

  • Investment Style: 31% of the REIFs surveyed are “Core” funds, the same as last year. “Core+” now makes up 19% of funds (up 1%), “Value-Added” 34% (up 2%) and “Opportunistic” down on 16% (down 3%).

  • Fund structures, liquidity & durations: SCS/SCSp represent most of the surveyed funds at 53%. Statistics confirm that the interest in RAIFs has not slowed down, with a total of 172 funds surveyed, compared with 134 in 2021.

    Liquidity: 64% of the surveyed funds are closed-ended, a decrease to 2020 levels. Restricted open-end funds have remained stable at 23%.

  • Fund size & gearing: In line with the survey findings of previous years, smaller funds continue to make up the majority of REIFs, with 46.7% falling in the category of a NAV of under EUR 100 million, however this is down from 52% last year. A significant increase was seen in funds with a target NAV higher than EUR 400 million representing 37.8%, up from 32.7% in 2021. 46% of funds aim to keep their gearing below 20% loan-to-value ratio (LTV), while a further 49% aim to keep LTV levels to below 60%.

  • Investor base: 3% of investors come from Europe, with the remainder predominantly from the Americas (7.5%). 4.7% are highly diversified, which confirms the global appeal of the Luxembourg fund regimes. Luxembourg-domiciled funds are mainly used for small groups of institutional investors, with 88% having 25 or fewer investors.
  •  

Download the ALFI Luxembourg Real Estate Investment Funds Survey 2022.

 

For more information, please contact:

Guy Taylor
Peregrine Communications
Tel: +44 (0) 20 3040 0867
guy.taylor@peregrinecommunications.com

Luigi Salerno
Head of Communications, ALFI
Tel: +352 22 30 26 1 
communications@alfi.lu

Notes to editors:
The Association of the Luxembourg Fund Industry (ALFI) represents the face and voice of the Luxembourg asset management and investment fund community, championing mainstream, private assets and sustainable investing. ALFI seeks to promote Luxembourg’s fund sector internationally, and to cultivate for the benefit of its members a collaborative, dynamic and innovative ecosystem underpinned by the most robust regulatory framework. ALFI’s ambition is to empower investors to meet their life goals.

Created in 1988, the Association today represents over 1,500 Luxembourg domiciled investment funds, asset management companies and a wide range of business that serve the sector. These include depositary banks, fund administrators, transfer agents, distributors, legal firms, consultants, tax advisory firms, auditors and accountants, specialised IT and communication companies. Luxembourg is the largest fund domicile in Europe and a worldwide leader in cross-border distribution of funds. Luxembourg domiciled investment funds are distributed in more than 70 countries around the world.

To keep up with all the news from ALFI and the fund industry in Luxembourg, follow us on LinkedIn, Twitter (@ALFIfunds), YouTube and Flickr.

For more information please visit www.alfi.lu.