Assets under management at Luxembourg-domiciled real estate funds declined by a mere 1% during the first three quarters of the year, with fund firms increasingly opting for the reserved alternative investment fund (Raif) structure, according to industry executives who worked on an Association of the Luxembourg Fund Industry survey.

Christophe Masset, partner, and Anne-Sophie Le Bris, senior manager, at Deloitte in Luxembourg, provided the figures during a press briefing held at Alfi’s Private Assets Conference, where the was released, on 28 November 2023.

Here are a few highlights from the study.

Assets under management in Luxembourg real estate funds fell modestly from €137.4bn to €135.8bn between the end of 2022 and the end of the third quarter of 2023. Compared to decade earlier, however, AUM was up by 446%.

The reserved alternative investment fund (Raif) structure overtook the specialised investment fund (Sif) structure for the first time this year, with respective shares of 31% and 30%, the Deloitte executives noted in the briefing.

Nearly 6 in 10 Luxembourg real estate investment funds that took part in the survey had a limited partnership (SCS) or special limited partnership (SCSp) legal form.

Just more than half of Luxembourg real estate investment funds had a multi-sector investment strategy, most likely to balance risk. The residential sector was stable, while there were small decreases in retail and office fund strategies.

Management fees were 1% or lower at the majority (60%) of real estate funds, as the sector aims to keep costs competitive.

The survey covered 706 Luxembourg-domiciled funds. The regulated vehicles--Sif and part 2 funds--in the sample collectively had €135bn in assets under management. The Deloitte executives said they could not provide an authoritative figure for AUM at the non-regulated funds that were surveyed. The firms were polled during the third quarter and data was current as of the end of September 2023.