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Sector snapshot

Real estate funds were resilient in 2021



The real estate funds survey presented by the Association of the Luxembourg Fund Industry on 1 December 2021 was conducted in partnership with Deloitte Luxembourg. Illustration: Shutterstock

The real estate funds survey presented by the Association of the Luxembourg Fund Industry on 1 December 2021 was conducted in partnership with Deloitte Luxembourg. Illustration: Shutterstock

The Association of the Luxembourg Fund Industry published its Real Estate Investments Funds 2021 survey 2021 on Wednesday. Its results indicate the sector’s strong resilience following the pandemic.

The 15th annual edition of the Alfi’s survey of Luxembourg-real-estate investment funds was presented at its annual PE & RE conference. It highlights the resilience of the sector in Luxembourg. Despite the global covid-19 pandemic, the industry has seen assets under management in real estate investment funds increase by 14.8% over the last 12 months, compared to the 10.5% growth in the same period last year, bringing total assets under management to €104.4bn*.

In 2021, 69 additional funds were included in the survey, bringing the total number of vehicles surveyed to 518. This figure includes 88 regulated AIFs, 134 real estate-dedicated RAIFs, 9 SICARs and 76 non-regulated vehicles. All indirect real-estate funds, such as funds of real estate funds, real estate debt funds and securitisation vehicles were not included in the survey.

Multi-sector strategies remain the most popular among investors, with 47% of allocations. For single-sector strategies, residential has the highest allocation at 9%, followed by retail and office at 7%, down from 2020. Smaller funds continue to form the majority of investments, with 52% of funds under €100m.* It is also noted that 85% of the funds surveyed have not delegated risk management outside Luxembourg, indicating that the country retains strong credibility in this area.

 

Emmanuel GuttonEmmanuel Gutton, Alfi’s legal and tax director, commented: “This year’s Alfi REIF survey illustrates the strong growth of the real estate fund industry, even in difficult times. Interest in RAIFs is continuing with 134 funds surveyed, up from 98 in 2020. As in previous years, the vast majority of new funds were launched by originators/AIFMs from Europe (mainly Benelux, Germany and the UK) and the US.”

Francisco Da Cunha, real estate tax and infrastructure sector leader at Deloitte Luxembourg and co-chair of the Alfi REIF survey working group, added that: “covid-19 has tested the liquidity of real estate funds. We looked at these exceptional market effects and found that only 1% of REIFs surveyed encountered special situations in the last 12 months, two funds temporarily suspended redemptions in 2020 and 3% reported having significant redemptions during this period. This shows the resilience of the private equity market.”

Read the full survey here.

*Source: CSSF as at 30 September 2021