Infrastructure 2013: global priorities, global insights
Thinking about infrastructure as an economic stimulus, developed nations and emerging markets are planning for the future. Learn more in our annual report.
VAT deduction right
Alert regarding a circular issued by the Luxembourg tax authorities regarding the VAT deduction right. The Luxembourg VAT authorities impose the direct allocation and special prorata methods based on allocation keys other than that based on turnover. This change is applicable as from 2013.
Luxembourg boosts cooperation on tax information exchange
Following Luxembourg’s adoption of a Law in March 2013 on administrative cooperation between EU Member States in the field of taxation, Luxembourg also announces automatic exchange of information on interest payments...
AIFM Directive Q&A - Marketing investment funds by non-European managers to European investors
From July 2013, non-EU managers will no longer be able to raise capital from European investors as they did in the past. This Q&A answers some of the key questions asked by non-EU managers about raising capital...
Luxembourg draft law proposes unconditional deferral of exit taxes
On 15 March 2013, the Luxembourg government submitted a draft law to the parliament amending the exit tax rules for individuals and companies. The draft law provides for an unconditional payment deferral of the capital...
2013 EMEIA Real Estate and Hotels Workshops
300 delegates listen to Ernst & Young professionals and industry leaders share their views and market insights on the challenges ahead. Read our report.
Flocking to Europe: non-performing loan report
For the first time since the financial crisis and property market downturn, investors have opportunities on both sides of the Atlantic. Learn more in our survey.
The Luxembourg Financial Connection, Issue 19
The Luxembourg Financial Connection is Ernst & Young’s newsletter on regulatory, leading practice and market developments in the financial services industry from a Luxembourg perspective.
EU Financial Transaction Tax in January 2014? The Commission’s revised proposal
In February 2013, the European Commission presented its Proposed Directive implementing an EU Financial Transaction Tax (FTT) in 11 participating Member States...

Real Estate

Building your business future

Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks, whilst meeting the challenges of the current economic environment and achieving sustainable growth.

Luxembourg has emerged as the leading domicile in Europe for vehicles investing directly in internationally diversified real estate portfolios. Key factors behind Luxembourg’s success include the flexible legal and fiscal environment, the ability to structure cross-border investment strategies and investors’ desire to diversify their portfolios.

Our real estate practice has the ability to mobilize a team of seasoned professionals to address complex and demanding challenges and provide seamless service on a global basis. We can help move you forward. Are you ready to break ground?

In working with you, we draw on our industry knowledge and insight to help you strategically position yourself – wherever you are in the world. Let us help you better understand some of the key challenges facing the industry, including:

Regulatory and technical accounting changes

Major regulatory and technical accounting changes are occurring in the US, Europe and other geographies, which has created a challenging environment for real estate. These include the Dodd-Frank Act, the Alternative Investment Fund Managers Directive (AIFMD) and proposed accounting changes for leases and revenue recognition from the Financial Accounting Standards Board and International Accounting Standards Board.

We are committed to helping our clients understand how to approach these changes. We advise funds on SEC examinations and help them assess, design and implement compliance programs.

Effectively navigating the sophisticated marketing regime required by the AIFMD will be a key challenge and could lead to a competitive advantage for alternative investment groups.We are committed to helping our clients achieve full compliance and to provide them with the ongoing support they need.

In addition to overall market regulation, there are continuous developments in reporting standards and market best practice such as INREV guidelines. For instance, considering the potential implication charges in leasing and revenue recognition rules early has become a critical issue.

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Real estate private equity

The recession, financial crisis and downsizing in the credit market have all impacted real estate private equity funds over the past several years. Given the ongoing challenging environment, it is more important than ever to understand the trends affecting the sector so you can respond effectively.

Key trends include:

Distressed deal opportunities will continue and convergence of the bid-ask spread will foster greater deal volumes.
Due to regulatory and financial reporting changes, the fund operating models will change over the medium to long term.
Overall, fund terms have significantly evolved since the financial crisis, and many real estate fund managers have had to make concessions to attract investors and win back their confidence.
Investors are now more focused on scrutinizing the real estate fund platforms where they are placing capital. More information will be needed to meet investors’ reporting requirements.

Related materials: