The 15th annual edition of the 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.

Key takeaways

–Number of surveyed REIFs grew by 69, bringing the total to 518 surveyed vehicles;

–Multi-sector remains 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.

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

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.

The full survey is available HERE

Publié le 06 décembre 2021