Agefi Luxembourg - mars 2026

Mars 2026 25 AGEFI Luxembourg Fonds d’investissement E volving market dynamics are driving renewed institu- tional focus on Europe’s residential real estate sector. Supported by affordability challenges and long-term de- mographic shifts, residential assets—ranging from tradi- tional rental housing to student and alternative liv- ing formats—are increas- ingly positioned as a core component of diversified real estate portfolios. This ar- ticle revisits the key structural drivers behind this trend and outlines why the living sector is expected to offer attractive investment opportunities for both open-ended and closed-ended funds. Two major developments have emerged: the rise of multi-sector strategies, which represented 49% of the market surveyed, and the recovery of residential real estate as a single-sector strategy, which increased to 12% by 2022 (ALFI REIF Study, 2022). These shifts were largely influ- enced by the pandemic and evolving consumer preferences, leading to a seller’s market and re- newed institutional interest in residential assets. As we enter 2026, these trends have continued to shape the market. According to theALFI REIF Study (2024), multi-sector strategies now ac- count for 53%, while residential remains steady at 12%, confirming the trajectory identified ear- lier. Institutional investors increasingly view res- idential real estate as a source of stable income, inflation protection, and diversification in a volatile macroeconomic environment. Despite regulatory pressures, a complex geopo- litical context increasingly shaped by national- preference policies, and broader structural challenges facing Europe, residential real estate continues to stand out as an attractive invest- ment for funds. Its resilience stems from persis- tent demand fundamentals, strong occupancy dynamics, and the long-term societal need for quality housing—factors that help counterbal- ance the uncertainties affecting other asset classes. Beyond traditional residential, this article also expands the analysis to adjacent sectors such as student housing, senior living and affordable housing—segments that are gaining prominence as part of broader living-sector strategies. It examines the structural forces behind this evo- lution, particularly the affordability crisis and demographic shifts, and outlines why these res- idential related asset classes are emerging as compelling opportunities for both open and closed ended funds. Structural Drivers of Residential Real Estate Growth The Housing Affordability Crisis Housing affordability is at its worst level in over a decade, surpassing pre-2008 financial crisis condi- tions.Advanced economies face severe affordabil- ity challenges, driven by higher borrowing costs and persistent demand (Deniz Igan, 2024 (1) ). This imbalance is strengthening the leasing market, as more households are pushed toward rental solu- tions—further supporting demand for profession- ally managed residential assets. For funds, this environment reinforces the attractiveness of value add and core plus strategies that combine financial resilience with measurable social outcomes. Demographic Shifts and Urbanization Demographic changes are reshaping housing de- mand globally. Developed countries are aging rapidly, creating demand for senior housing and smaller units. Urbanization continues to acceler- ate. In Europe, 75,95% of the population was re- ported to be living in cities in 2024 according to theWorld Bank. Europe’s level of urbanization is expected to increase to approximately 83.7% in 2050. Generation Z, born between 1997 and 2012, is now the largest generation globally. Digitally fluent and environmentally conscious, they favor urban living and flexible rental op- tions, fueling demand for student housing and co-living spaces (Savills, 2023). These demo- graphic trends are structural and long-term, not cyclical, and they underpin durable investment themes. Building on these dynamics, the follow- ing sections examine three residential asset trends that are increasingly shaping institutional invest- ment strategies today: student housing, senior housing, and affordable housing. Emerging Investment Opportunities Student Housing: FromNiche toMainstream Student housing has evolved from a niche seg- ment to a mainstream investment theme. Europe faces a shortage of three million beds, projected to reach 3.2 million by 2029, representing a €450 billion investment opportunity (JLL, 2024). The Europe student accommodation market is ex- pected to grow fromUSD 15.58 billion in 2025 to USD 17.13 billion in 2026 and is forecasted to reach USD 27.5 billion by 2031 at 9.93% CAGR over 2026-2031. (Mordor Intelligence, 2026) Rents in purpose-built student accommodation increased by 6.5% in 2023 and a further 5.4% in 2024, with occupancy rates reaching 98% (BON- NARD, 2024). Despite regulatory and afford- ability challenges, strong enrollment trends and demand for modern amenities make student housing a resilient and profitable asset class. Indeed, Savills 2025 annual Euro- pean Living Investor Survey con- firms this trend: PBSA is now the most sought-after living sector, surpassing multifamily for the first time, with 62%of investors planning to increase exposure. Senior Housing: ResilienceAmidDemographic Shifts Senior housing and healthcare real estate are set for significant expansion, driven by Europe’s aging population and similar trends globally. By 2030, one in four Europeans will be aged 60 or older, creating strong demand for housing solu- tions tailored to older adults (SHHA, 2024). The market is projected to grow at a CAGR of 8.7% from 2024 to 2031, supported by trends such as sustainability, integrated healthcare services, and wellness-focused communities. Operators aremoving beyond traditional nursing homes toward assisted living and independent residences, often incorporating amenities like fit- ness centers and digital health monitoring. From an investment perspective, senior housing offers long-term stability due to predictable demand and low correlation with economic cycles. We believe that the decline in 2023 (transaction vol- umes fell by 35%) is primarily attributable to tem- porary valuation adjustments rather than struc- tural market weakness. Regulatory compliance and affordability remain challenges, but demo- graphic imperatives and innovation position senior housing as a compelling opportunity for institutional investors. Affordable Housing: Institutional Momentum Affordable housing is increasingly recognized as both a social necessity and an attractive long-term investment class. The sector faces a substantial structural gap, with the European Commission estimating an annual €150 billion investment shortfall needed to meet Europe’s housing de- mand and reduce exclusion (European Commis- sion, 2026). This imbalance continues to fuel institutional investor interest, particularly as af- fordable housing offers stable income streams, re- silience through economic cycles, and strong alignment with ESG principles. Momentum is set to accelerate with the launch of the Pan-European Investment Platform for Af- fordable and Sustainable Housing in 2026, de- signed to pool public and private capital and scale financing solutions. The initiative aims to deliver up to 1.5 million new or renovated affordable homes across the EU, supported by the European Investment Bank and national promotional banks, making the sector even more compelling for investors seeking both impact and stability (European Commission & EIB Group, 2025). Market Outlook Prime residential markets are forecast to experi- ence rental growth of 2.5% annually from 2024 to 2028, outpacing inflation (AEW, 2024). Since 2008, residential’s share of global investment volumes havemore thandoubled, confirming its emergence as a core sector for institutional investors (AEW, 2024). In parallel, the European residential real es- tate market is expected to grow fromUSD 2.9 tril- lion in 2026 to USD 3.8 trillion by 2031, reflecting a strong 5.88% CAGR and underscoring the scala- bility of the sector (Mordor Intelligence, 2026). Additionally, the implementation of ELTIF 2.0 is set to further broaden the investor base, enabling a much larger pool of retail and quasi-institu- tional capital to access long-term, illiquid alterna- tive strategies—including residential, affordable housing, and living-sector platforms. The combination of the expansion of the alterna- tive sector to a broader investors base, the antici- pated market growth outlined earlier in this article, and the development of pan-European in- vestment platforms dedicated to affordable and sustainable housing is accelerating momentum across the residential, affordable, senior living, and student housing segments. Together, these forces are reinforcing the attractiveness and depth of the living sector, positioning it as a central pillar within the alternative investment landscape. Conclusion Residential real estate is entering a new phase of growth and diversification, even after the invest- ment slowdown of 2023–2024, when higher rates and market uncertainty temporarily dampened transaction volumes. Despite this, the residential segment proved to be one of the most resilient, with asset managers exposed to living sectors con- tinuing to outperform broader real estate trends. Looking ahead to 2026 and beyond, Europe stands out as the region where growth opportu- nities are most concentrated. Segments such as student housing, senior living, and affordable housing offer compelling prospects for long-term income stability, portfolio resilience, and ESG alignment. With demographic shifts accelerating and institutional appetite returning as financing conditions stabilize, the foundations for renewed expansion across Europe’s residential markets ap- pear increasingly robust. Clotilde BURIEZ, EY Luxembourg Partner, Assurance Audit Thomas PIRSON, EY Luxembourg Senior Manager, Audit 1)TheHousingAffordabilityCrunch ,https://urls.fr/c4HNUk Retrospective The Evolution of Residential Real Estate in the Fund Industry Why entrepreneurial families are institu- tionalising their capital in Luxembourg By Wim RITZ, Partner, Alternative Funds & Investor Services, Stellan Partners* A cross Europe and beyond, many entre- preneurial families encounter a predictable structural evolution. The first generation creates wealth through a concen- trated operating business. The second generation consolidates it. By the third or fourth generation, owner- ship is typically spread across multiple family branches. The challenge is rarely a shortage of capital. It is fragmentation. What once began as a unified fortune controlled by a founder gradually evolves into a network of holding companies, trusts and investment vehicles owned by dozens, sometimes hundreds, of family members. Dividend flows disperse, investment decisions decentralise and strategic alignment becomes increasingly difficult to maintain. For families seeking to preserve and growcap- ital across generations, this raises a funda- mental governance question: how can dis- persed wealth still act collectively? An increasing number of entrepreneurial fami- lies are addressing this challenge by introduc- ing a family investment platform . Rather than dismantling legacy structures, fam- ilies establish a central investment vehi- cle through which new capital can be pooled and deployed, allowing them to coordinate future investments without disturbing historic assets. In practice, these platforms increas- ingly mirror the architecture of insti- tutional private equity funds. A fami- ly-controlled entity assumes the role of sponsor andgeneral partner,while fam- ily members participate economically as investors. Strategic control remains centralised while owner- ship remains distributed across generations. This institutionalisation of family capital reflects a broader shift in the private wealth landscape. Historically, family wealth relied on two engines: the operating business that created the fortune, and the private investments pursued indepen- dently by familymembers. The family investment platform introduces a third engine. It does not generate wealth directly but organises it, recon- necting fragmented capital and enabling the fam- ily to invest strategically as a long-term investor. Luxembourg has increasingly become a natural jurisdiction for structuring such platforms. Partnership vehicles such as the SCSp allow fam- ilies to replicate the governance model of private equity funds while maintaining full ownership of their capital. A family-controlled general partner defines strategy and manages investments, while family members participate as limited partners sharing economic returns. Unlike institutional funds, these platforms typi- cally operate with generational investment hori- zons rather than fixed fund cycles. Capital flows into the structure through dividends, liquidity events or voluntary contributions and is rede- ployed into long-term investments aligned with the family’s strategy. Forprivatebanks, familyoffices andassetmanagers, such platforms increasingly provide a common operating framework. Rather than interacting with fragmented family entities, banks and managers engage with a single governance structure capable of allocating capital at scale. In this sense, the family investment platformplaces entrepreneurial families, private banks and professional asset managers on a comparable institutional footing, allowing them to collaborate through governance structures that resemble those of the private equity industry. Recent regulatory developments further reinforce this evolution. The implementation of AIFMD II strengthens governance and oversight across the European fund ecosystem.Although designed for institutional asset managers, these standards increasingly influence how large families organise their own investment platforms. At the same time, Luxembourg’s competitive car- ried interest regimes and impatriate tax incentives continue to attract experienced investment pro- fessionals who support family-led investment structures alongside traditional asset managers. Taken together, these developments illustrate a broader convergence between institutional asset management and long-term family capital. Structures originally developed for private equity funds are increasingly being adapted to organise multi-generational family wealth. Luxembourg, long established as a global hub for investment funds, is therefore emerging as a struc- turing centre not only for institutional capital but also for entrepreneurial families seeking to insti- tutionalise their wealthwhile preserving full own- ership and strategic autonomy. * Wim Ritz advises entrepreneurial families, family offices, private banks and institutional investors on cross-border investment structuring, regulation and governance of long- term family capital. From Family Holdings to Investment Platforms