Luxembourg Real Estate Investment Funds Survey 2024

Luxembourg REIFs evolve to meet a changing market

• The latest edition of the ALFI REIF Survey highlights growth, flexibility and global reach of real estate funds. Indeed, the 2024 Survey confirmed the constant increase of the lightly regulated investment Funds.
• During a year affected by market stress, 80.75% of funds decided to hold onto their investments while only 1.4% opted to liquidate and reinvest — showing strong resilience.
• An increased use of liquidity management tools (4.5% suspended redemptions, 16% processed redemptions in kind) highlights robust governance.
• If most REIFs remain classified as Article 6 under SFDR, 24 funds upgraded to Article 8 or 9 — a positive signal for sustainability integration.

Luxembourg continues to solidify its position as a leading hub for real estate investment funds (REIFs), according to the latest edition of the ALFI Real Estate Investment Funds Survey. The survey provides insights into how the market is adapting to shifting investor demands, regulatory evolution and broader macroeconomic trends.

Key takeaways from the 2024 survey include:

Lighter structures gaining ground
The survey confirms a strong shift toward lightly regulated fund structures. RAIFs, manager-regulated AIFs and non-regulated vehicles now represent 69.5% of the market, with the significant evolution from just one RAIF in 2016 to 226 in 2024. The SCS/SCSp legal form continues to dominate, used by 59% of surveyed funds, reflecting preferences for tax transparency and structural simplicity.

Institutional focus with broad strategies
REIFs remain primarily institutional with an EU base of investors: 80.4% of investors come from Europe, and 83% of funds serve 25 or fewer investors. Multi-sector strategies are now the norm, followed by targeted allocations to residential, office and retail. This diversification reflects growing demand for flexibility and stability.

Resilience under pressure
Despite market headwinds, Luxembourg REIFs showed notable resilience. Over 80% of funds chose to hold their investments during challenging conditions rather than liquidating or reinvesting. The use of liquidity management tools such as redemption gates remains limited, underscoring the long-term nature of the strategies employed. Only 4.5% of funds suspended redemptions, while 16% processed redemptions in kind, indicating that most managers rely on strong governance rather than reactive measures.

Commenting on the findings, Christophe Masset, Partner at Deloitte, Cross-Border Tax stated: “The latest ALFI survey highlights the rising importance of liquidity management for Luxembourg real estate funds amid market stress driven by geopolitical shifts and monetary policy changes. Among funds using liquidity management tools, nearly 5% have suspended redemptions. As regulators finalize AIFMD and UCITS standards, Luxembourg remains at the forefront, providing a robust framework for managers to navigate these challenges”.
This cautious but steady approach reflects the long-term nature of REIF strategies and underlines investor confidence, even during volatile conditions.

Trends in size, fees and leverage
Smaller funds continue to make up the bulk of the market, but larger vehicles are gaining ground. Fee structures remain largely based on NAV, while performance fees are in decline. Use of leverage is becoming more conservative, aligned with a cautious view on debt in a higher-rate environment.

The survey confirms Luxembourg’s continued relevance as a jurisdiction of choice for global real estate strategies. The adoption of ELTIF 2.0 and growing openness to retail participation point to a sector that is not only evolving, but expanding.

“ELTIF 2.0 tackles several challenges raised under ELTIF 1.0, through both enhanced product design and improved distribution,” said Britta Borneff, ALFI CMO.

In this context, the design of current and future product launches should carefully consider all key elements, including liquidity management programmes, distribution capacity, and the deployment of appropriate transfer agent technology, among others. Despite these complexities, the rapid growth of ELTIF 2.0 may well position it as a strong future counterpart to UCITS or AIFs."

Concluding, she added “with its flexibility, experience, and international reach, Luxembourg remains a reliable platform for real estate fund managers to innovate and grow .”

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ENDS

For more information, please contact:

ALFI

Luigi Salerno

ALFI Head of Communications

Luigi.salerno@alfi.lu

Peregrine Communications

ALFI@peregrinecommunications.com

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Notes to editors:

About ALFI

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.

The Association today represents over 1,400 Luxembourg domiciled investment funds, asset management companies and a wide range of business that serve the sector. Our members are investment funds, management companies, asset managers, alternative investment fund managers (AIFMs), depositary banks, legal and consultancy firms, tax advisory firms, auditors and accountants, specialised IT and communication companies and individual members.

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

For more information please visit www.alfi.lu.