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LuxReal has renewed its executive board, welcoming new members. We invited them to introduce themselves and share their perspectives on the challenges facing the real estate sector in Luxembourg. Kelly Anckenmann (Pure Capital) talks about the transition issues underway and the new requirements for project financing.

Why did you decide to join the LuxReal board? How would you like to contribute to the association?

I’ve always been an active participant in LuxReal events and have worked extensively with clients managing real estate funds, so joining the board felt like a natural next step. With my background, I hope to bring greater visibility to LuxReal in the market and support the association’s outreach to new members.

It’s truly an honor for me to join LuxReal, and I’m excited about the opportunity to contribute meaningfully to its continued growth and success.

What does LuxReal mean to you? Why is this association essential today?

To me, LuxReal represents a strong and dynamic platform that brings together professionals from across the real estate investment industry in Luxembourg. It fosters valuable connections, encourages knowledge sharing, and promotes best practices within the sector.

Today, the association is more relevant than ever. In a constantly evolving market, having a space where professionals can engage in open dialogue, stay informed on industry trends, and collaborate on key challenges is incredibly important. LuxReal plays a key role in strengthening the real estate ecosystem in Luxembourg and supporting its development.

What is your view of the Luxembourg real estate market today and, more generally, of the development of the real estate business from Luxembourg?

The Luxembourg real estate market is currently undergoing a period of significant transition.

The normalisation of interest rates, persistent inflation in raw material costs, ongoing bottlenecks in production and supply chains, and—crucially—tighter banking regulations, notably the upcoming implementation of Basel IV, are all weighing heavily on the market. These factors are contributing to a more cautious lending environment, leading to wider credit spreads and more selective project financing.

At the national level, it is clear that the Luxembourg property market has been significantly impacted in recent years. Although demand for high-quality assets in segments such as logistics and residential rentals remains robust, both developers and investors are facing growing challenges. While the secondary residential market shows early signs of recovery, the primary market continues to lag behind. Off-plan sales remain weak, primarily due to the fragile financial standing of many developers.

Despite these short-term difficulties, I remain confident in the long-term potential of Luxembourg's real estate sector. The country's political and economic fundamentals remain strong, and the economy is adapting to global and European shifts in a dynamic way. Luxembourg continues to affirm its position as a key European hub for real estate investment.

Looking ahead, the market is expected to become more structured, sustainable, and financially disciplined. Future growth will depend on how well stakeholders adapt to more stringent financing conditions, while capitalising on the country’s reputation as a stable, innovative, and investor-friendly destination. These structural strengths will be critical in supporting the market over the medium to long term.

What do you see as the main challenges facing the sector in the coming months?

The most pressing challenge is undoubtedly access to financing. Developers are already experiencing growing caution from banks, in anticipation of Basel IV, which goes significantly further than Basel III. Basel IV will introduce higher capital requirements, more conservative and transparent risk models, and—most notably—a standardised floor for risk-weighted assets (RWAs) that limits the use of internal models. In addition, banks will face stricter liquidity requirements and more extensive reporting obligations.

These regulatory changes will have a concrete impact: banks are expected to increase lending margins to offset the capital constraints imposed on them, and overall lending volumes to the real estate sector could decline. Although the full extent of this impact is not yet quantifiable, it is clear that financing conditions will tighten. Developers will need to reconsider their capital structures, possibly increase equity contributions, and explore alternative financing channels to maintain project feasibility.

This new environment will force developers to rethink their financial strategies. Traditional senior debt and loan-to-cost ratios may no longer be sufficient or accessible. Yet, the ability of developers to inject more equity into projects is limited. The sector will need to turn to new financing instruments—private debt, crowdfunding platforms, and new equity investors are likely to play a growing role in project funding.

In short, the financing of real estate projects is entering a new era. The challenge will be to build flexible, diversified capital structures capable of withstanding both regulatory pressure and market volatility. In this context, Luxembourg’s role as a European hub for funds becomes a key asset. The country is uniquely positioned to create innovative real estate fund models—such as ELTIFs—which can not only provide access to long-term capital but also broaden access to the real estate market for a wider base of retail investors. This fund-based approach could become a cornerstone of the sector’s resilience and continued growth.