Defensive Properties Europe (DPE)
1.The sub-fund
The Defensive Properties Europe (“DPE”) sub-fund has been active since 14 June 2018. Its investment policy is to acquire land for real estate development (residential, offices and business). This land is not necessarily, at the time of acquisition, in a buildable area. In principle it is land “in the making”.
This sub-fund is currently acquiring land mainly located in Luxembourg with a view to future development.
Investment horizon 5 to 7 years
2. Investment zone
This sub-fund can invest in all eurozone member countries. Currently, investments focus on the Grand Duchy of Luxembourg.
3. The market
The Luxembourg market has undergone rapid development over the past decade. The main drivers of the Luxembourg market are office real estate and residential real estate.
Luxembourg remains a growth market characterized by its political and economic stability. Luxembourg has undergone considerable evolution: initially, the country was largely dependent on agriculture, then the steel industry underwent a boom there. Subsequently, due to industrial decline, Luxembourg shifted its policy to foster new growth sectors, including financial services. Luxembourg is thus a place of first order at which to base and manage investment funds and for banking and insurance both at European level and, indeed, worldwide. The country is continuing to diversify by investing in new industries such as logistics and information and communications technology.
By virtue of its economic development and its job opportunities, each year, the population of Luxembourg increases, mainly resulting from positive migration flows. This development not only attracts new residents but also new investors, including high net worth individuals. Following different forecasts based on various scenarios of the evolution of the Luxembourg gross domestic product (GDP), over the next forty years it should see its population increase by between 3,500 people, for the most pessimistic projections, and 16,000, for the most optimistic. Moreover, in terms of GDP growth, forecasts by the government and by international bodies such as the International Monetary Fund (IMF) are also optimistic.
The growth of real estate sector will also be supported by technological innovation, the challenges of sustainable development, and new sources of funding.
Besides its political and fiscal stability, one of the main assets of the Grand Duchy is its adaptability as regards economic strategy. Before becoming a premium financial centre, the country’s economy depended mainly on agriculture. The steel industry took over and underwent considerable growth. Due to industrial decline, the government shifted its policy to foster new growth sectors, including financial services. The Grand Duchy was thus the first European country to adopt the UCITS Directive in 1988, allowing it to become a premier domicile for investment funds market in Europe and worldwide. Subsequently, the country took advantage of its experience in financial matters to become an internationally recognized centre for banking and insurance. Today, the financial centre is at the heart of its economy, even though the country is continuing to diversify by investing in new industries such as logistics and information and communications technologies.
4. Background
The DPE sub-fund has been active since 14 June 2018. In principle, it has four years to carry out its investments.
