Real Estate Funds in Luxembourg

Real Estate Funds in Luxembourg

Updated on Thursday 17th September 2020

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Setting up a real estate fund in Luxembourg provides a wide set of advantages, the first being that the investment vehicle will be incorporated in one of the leading financial markets in Europe and in the world. Our team of financial experts can help investor with legal advice and legal representation in the steps of opening a Luxembourg fund. Those who want to register a real estate fund can also be represented in all the incorporation steps. 
 

What are the main vehicles for real estate funds in Luxembourg?

 
One of the first steps in opening a Luxembourg fund as a real estate fund is to decide on the legal entity under which the fund will operate. This is a crucial aspect as this can influence the legislation which regulates the respective type of fund, as well as the tax obligations of the fund’s representatives. 
 
In the case of real estate funds, the legislation is actually very flexible, as investors can register the fund as a commercial company, regulated by the commercial legislation applicable in this country (also referred to as a non-regulated entity), or as an investment fund that is regulated by the Luxembourg Financial Supervisory Authority (CSSF)
 
The decision of opening an investment fund in Luxembourg as a non-regulated entity or as a regulated entity relies in the capital requirements and the ability of the investors to raise the required capital following the applicable method for the selected entity, the type of investors that can invest in a particular type of fund (there are three basic categories – institutional investors, professional investors and private investors), the tax aspects applicable to a structure and other relevant matters, which can be presented by our team of financial representatives
 
Those who want to register a real estate fund can open a SICAV in Luxembourg (which refers to an investment company with variable capital) or a SICAF (an investment company with fixed capital). This type of vehicle can take the form of a common fond as well. Investors also have the possibility or registering a SIF in Luxembourg or a SICAR (a risk capital investment company). 
 
For entities that are included in the non-regulated structures, investors have the possibility of incorporating the company as a private limited company or as a public limited company. Other legal entities are available and you may find out more information on how to register any of the business forms available for real estate funds in Luxembourg from our team of financial experts
 
 
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What is the level of investments in real estate funds in Luxembourg?

 
Being one of the key players of the financial sector at a global level, Luxembourg also stands out as one of the most competitive markets regarding the investments concluded by real estate funds. Those who want to register an investment fund in Luxembourg as a real estate fund should know that the results of such funds incorporated as reserved alternative investment funds (RAIFs) increased at a rapid pace, as follows:
 
  • RAIFs incorporated in Luxembourg that make their investments in real estate projects increased from 27 funds in 2018 to 63 funds in 2019, marking an increase of 133%;
  • the assets under management of real estate funds in Luxembourg accounted for EUR 82.2 billion in the 3rd quarter of 2019 (this refers to regulated structures, which fall under the supervision of the CSSF);
  • compared to the 3rd quarter of 2018, this marked an increase of EUR 12.4 billion, when the value of assets under management was of EUR 69.84 billion;
  • the RAIF was introduced in Luxembourg in 2016 and, since then, it became increasingly attractive to foreign investors;
  • currently, approximately 18% of the investors opening a Luxembourg fund as a real estate fund prefer this structure. 
 

How long does it take to register a real estate fund in Luxembourg?

 
The process of opening an investment fund in Luxembourg depends on the nature of the fund, the type of licenses it needs and numerous other legal aspects. When we refer to real estate funds that are incorporated as non-regulated entities, meaning that they are registered as commercial companies, the registration procedure can last approximately two weeks.
 
If the investors opt to open a Luxembourg fund as a regulated vehicle, which is supervised by the CSSF, the registration can last up to four weeks, as different types of documents have to be prepared and approved by the institution. For an extensive presentation on how to register a real estate fund in Luxembourg, we invite you to address to our team of financial experts, who can help you select a suitable business form that is tailored to your investment plans.