Luxembourg Real Estate Investment Regimes

Grand Duchy of Luxembourg provides for a sound environment for international investments in today's unstable global economic context. The recent fluidity of the real estate market proves that the country presents profitable business opportunities in this area as well. Growth in the respective sector keeps increasing upon the entry of major corporations from the US, Germany and France, into the market. Private investors are also attracted by this trend and flux of new projects shows that new arrivals are yet to come.

We can easily state that Luxembourg has managed to adopt new approaches to meet with the regulatory requirements of the real estate industry and achieved a sustainable growth in this respect. The Luxembourgian legislation has developed various vehicles for investing in diversified real estate portfolios and introduced a flexible legal and fiscal atmosphere for cross-border investments.

Real Estate Investment Vehicles

1. Real Estate Funds are mainly regulated by the laws and circulars issued by the "Commission de Surveillance du Secteur Financier" (CSSF) in Luxembourg. The basic laws governing such funds are the Law on the Undertakings for Collective Investment dated 17 December 2010 and the Law on Specialized Investment Funds ("SIFs") dated 13 February 2007.

   Real Estate Funds governed by the Law on the Undertakings for Collective Investment or the Law on SIFs can be incorporated either in corporate form such as SICAV (variable-capital investment company or SICAF (fixed-capital investment company), in contractual form (FCP- common investment fund) or as limited partnerships (SCS- limited partnerships with legal personality or SCSp- special limited partnership without legal personality).

   Interests in funds which are subject to the Law on the Undertakings for Collective Investment can be sold to any type of investor. Funds regulated under Part I of the said law can be sold to any type of investor in any EU Member State, provided that they comply with certain procedures and investment restrictions. Funds under Part II, on the other hand, shall abide by the local regulations of the respective member, in addition to the investment restrictions.

   Interests in funds which are subject to the Law on SIFs can only be sold to "well-informed investors", which enables high net worth individuals to benefit from SIFs. SIFs are not subject to general investment restrictions, on condition that risk dispersals are made at an adequate level.

2. ...