The Luxembourg financial market is very popular with professional investors and real estate funds. That is why the location is so attractive.
Lack of transparency on the German real estate market – Luxembourg is passing by
Christoph Trautvetter and Markus Henn from the Rosa-Luxemburg-Stiftung recently conducted the study “Who Owns the City?” in order to create more transparency on the Berlin real estate market. The background to the study is that the public has been authorized to inspect the German transparency register since January 2020. So far, it has been impossible for many tenants to find out who actually owns their apartment building.
However, the results of the study were rather sobering: Even after intensive research, only 298 of the 433 real estate companies examined worldwide were found, the remaining 135 remained anonymous. It is therefore still possible for real estate companies to hide their identity despite the transparency law. The deputy chairman of the party Die Linke, Fabio de Masi, assesses the current situation in the press release of the Rosa Luxemburg Foundation as follows: “From a political point of view, Germany remains a paradise for money laundering with concrete gold as long as the prosecution of real estate ownership via letterbox companies does not affect the actual owner can lead back. The transparency register in Germany even lags behind Luxembourg. ” According to the study, tenants in Luxembourg can access information about property owners much more easily and with less effort.
A large number of industrial investors are based in Luxembourg
The attractiveness of the Luxembourg financial center for large investors lies, among other things, in the security offered by the strict supervision of the financial supervisory authority CSSF. The high standards and regulations make the Luxembourg financial center an industry-wide location worth considering for professional investors, and consequently also for the real estate market. This is borne out by information from the Luxembourg fund association Alfi, according to which more than 300 real estate funds are based in Luxembourg and currently manage assets of around 80 billion euros, and the trend has been rising for years.
One of the research center CORRECTIV as part of the project “Who owns the city?” The survey carried out in the Munich area shows a similar picture. While many Munich residents were originally convinced, according to CORRECTIV, that many buildings belong to communities of heirs or owners of the region, in the course of the research, more and more anonymous property owners from Luxembourg and Switzerland were found in the data donations. As a result, there is a change in the ownership structure on the market, which illustrates the growing presence of real estate investors from Luxembourg. While this is largely opaque in Germany according to the study, in Luxembourg you can quickly and free of charge look up who owns which property in the register.
The Luxembourg financial center – this is why it is so attractive for large investors
As the newspaper Luxemburger Wort reports, the financial center of Luxembourg has developed into one of the world’s most interesting locations for investment funds in recent years. This is related to the fact that in 2013 Luxembourg was one of the first countries to implement the stricter rules of the European institutions in favor of investors. In addition, according to the newspaper, Luxembourg has “business-friendly legal and tax frameworks and the multilingual specialists are valued by many investors”. In addition, Luxembourg can convince itself with political stability, low taxes, a wide range of expertise in the financial sector and a triple A rating, informs the financial center initiative Luxembourg for Finance. This makes Luxembourg one of the three leading financial centers in Europe.
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Luxembourg for Finance reports that Luxembourg-based investment funds operate in over 70 countries and a total of 62 percent of cross-border investment funds are settled there. Nicolas Mackel from Luxembourg for Finance adds to faz.net that various vehicles and structuring options allow real estate funds to react to individual requirements. In addition, according to BONGUIDE, more and more institutions are choosing Luxembourg law: Most recently in July 2019, for example, the World Bank decided to list all of its sustainable bonds on the Luxembourg stock exchange. This also has to do with the fact that Luxembourg is a pioneer in terms of sustainable finance. The Grand Duchy was the first country in the world to introduce green bonds. A third of all global green bonds are now listed on the Luxembourg Green Exchange as of 2019. Leading FinTechs such as PayPal, Amazon Pay and AirBnB are also based in Luxembourg.
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