“We’re going to do that [introduce REITs],” Gramegna told the spring meeting of the Association of Luxembourg Fund Industry this week.
Now a popular portfolio staple for investors in the UK, France, Germany and Italy and more recently in Ireland, Luxembourg has been looking for some time at setting up a framework for REITs that would be recognised across Europe.
REITs are popular with investors because they trade like a share on the stock exchange but invest directly in property or mortgages. They can also offer tax advantages if they meet certain criteria as to ownership and investment portfolio.
However, getting the regulatory framework to the stage that a Luxembourg-domiciled REIT would be recognised across the European Union proved to be a difficult task, solved in the end by targeting one of the biggest markets first.
“The legal framework of the REIT that Luxembourg is looking to set up is such that it will ease regulatory recognition for the German insurance industry,” said Georges Bock, managing partner at KPMG Luxembourg.
“I believe it could still take until the year-end before we have a regulatory framework that would allow recognition to be up and running,” he said.
REITs are popular with investors because they trade like a share on the stock exchange but invest directly in property or mortgages. They can also offer tax advantages if they meet certain criteria as to ownership and investment portfolio.
According to an ALFI Survey of the real estate fund market composition in Luxembourg there was a total 237 direct real estate investment funds with an additional 40 Funds of Real Estate Funds completing the total population of 277 funds as at 30 June 2014.
“The continued growth in the number of REIFs in Luxembourg demonstrates that Luxembourg remains a favoured location to establish and maintain multi-national and multi-sectoral regulated real estate investment funds, which continue to appeal to institutional investors and fund managers around the world,” said Marc Saluzzi, chairman of ALFI.
In the UK property funds of all types recorded the highest sales of any asset class in February at £304m, while mixed asset funds saw sales of £137m, and fixed income funds sold £130m.
