Luxembourg real estate fund industry remains resilient and continues to grow

• Number of surveyed REIFs grew by 69, bringing the total to 518 surveyed vehicles;
• Multi-sector remain most popular strategy for investors, with a 47% allocation;
• Residential had the highest allocation at 9% for single-sector strategies, followed by retail and office (7%) down from 2020;
• Smaller funds continue to form the majority of REIFs, with 52% sub EUR 100 million.

The 15^th annual edition of the Association of the Luxembourg Fund Industry (ALFI) Luxembourg real estate investment funds survey highlights how resilient the real estate investment sector in Luxembourg really is. Despite the global Covid-19 pandemic, the industry saw assets under management of REIFs increase by 14.83% over the last twelve months compared to last year’s 10.54% growth at the same period, bringing total assets under management to EUR 104.4 billion.*

Emmanuel Gutton, Director Legal and Tax of ALFI, commented: “This year’s ALFI REIF survey illustrates how strongly the real estate fund industry continues to grow even during challenging times. The number of vehicles surveyed has grown again by 69, bringing the total to 518 surveyed vehicles. The interest in RAIFs is confirmed with 134 funds surveyed, compared with 98 in 2020.  As in previous years, new funds were launched overwhelmingly by initiators/AIFMs from Europe (mainly Benelux, Germany and the UK) and from the USA.”

Francisco Da Cunha, Real Estate Tax and Infrastructure Sector leader at Deloitte Luxembourg and Co-Chair of the ALFI REIF Survey working group, added: “Covid-19 put the liquidity of real estate funds to the test. We studied these exceptional market effects and found that only 1% of the REIFs surveyed encountered special situations over the last 12 months, 2 funds temporarily suspended redemptions in 2020 and 3% indicated that they had large redemptions in that time frame. This is testament to the resilience of the REIF market.”

Other topics and findings of the research were:

• New launches: 30 new fund units were launched in 2020 and 12 new fund units were reported as at September 2021, bringing the REIF population surveyed to 518. Nevertheless, it appears that there has been a decrease of fund unit launches during the Covid-19 pandemic (something to be further analysed as part of next year’s survey);
• Investment Style: 31% of the REIFs surveyed are “Core” funds. The continuous and significant drop of these “Core” funds is to the benefit of Core+ funds with 18% reported (13% last year), with the remainder split between “Value-added” (32%, increased by 4 pps) and “Opportunistic” fund strategies which have remained stable (19% in 2021 and 2020);
• Fund structures, liquidity & durations: 68% of the surveyed funds are closed-ended, a slight increase vs the last 3 surveys. This continuous increase of closed-ended funds compares with a decrease of “open-ended funds with restriction” (from 29% in 2019 survey, 25% in 2020 survey and 22% this year);
• Fund size & gearing: In line with the survey findings of previous years, smaller funds continue to make up the majority of REIFs, with 52% falling in the category of a NAV of under EUR 100 million. Overall, 141 funds reported a target NAV of less than EUR 100 million. 50% of funds aim to keep their gearing below 20% loan-to-value ratio (LTV), while a further 43% aim to keep LTV levels to below 60%, which confirms the significant increase of the latter over years.

Download the full ALFI Luxembourg real estate investment funds survey 2021.

*Source: CSSF as at 30 September 2021

ENDS

For more information, please contact:

Anna Ferreri

Head of Communications, ALFI

Tel: +352 22 30 26 – 48

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.

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For more information please visit www.alfi.lu.