Real Estate Investment Funds, or Reifs, in Luxembourg saw total assets climb by 26 percent in the year running up to the end of the third quarter, to 131 billion euro. The number of Reifs increased by 20 percent to 621 funds.
The latest edition of the Reif survey conducted by the Association of the Luxembourg Fund Industry, or Alfi, showed that multi-sector allocations remain the most popular strategy for Reif investors, with 49 percent.
Two thirds of the Reifs surveyed invest in Europe, while 8.2 percent invest globally; 9.2 percent in North America; and 6.9 percent in the Asia-Pacific region.
The proportion of larger funds - with assets in excess of 400 million euro - increased to 37.8 percent, while the majority of funds are still smaller ones, with assets up to 100 million euro.
“This REIF survey confirms that, despite geopolitical uncertainties this year in Europe, Luxembourg remains the favoured location to establish and maintain multi-geographical and multi-sectoral regulated REIFs, which continue to appeal to institutional investors and fund managers from around the world,” Alfi said in a statement.
Raifs & Reifs
Alfi’s legal and tax director Emmanuel Gutton noted that Reserved Alternative Investment Funds, a vehicle known as Raif, are becoming increasingly popular as a real estate Reif vehicle. The survey showed that a total of 172 Raifs were included, compared to 134 a year earlier.
Raifs have developed in recent years into a popular vehicle for alternative investments made via Luxembourg, not only for real estate but also for infrastructure and credit funds held for example by professional investors. A Raif can be easily created through an Alternative Investment Fund Management, or AIFM, and does not require direct supervision by regulator CSSF. The AIFM is responsible for meeting the regulatory requirements.
“The interest in Raif has not slowed down,” said Gutton in a statement. “It is encouraging to see that no significant special situations have been reported over the period surveyed. The Reif market seems resilient although the impact of geopolitical uncertainties is yet to be seen.
“The real estate fund industry is currently facing a challenging economic context,” said Christophe Masset, real estate tax partner at Deloitte Luxembourg and co-chair of the Alfi Reif survey working group. ”However, the 2022 Alfi Reif survey demonstrates that the Reif industry has shown great resilience.”
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