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PwC / ULI Emergimg Trends in Real Estate Europe 2017

Luxembourg seminar

John was a meber of the panel. You can read his summary here:


Speaking on the panel in Luxembourg, I was something of a Cassandra (the gloom but not necessarily the accuracy). Real estate is a long term investment asset and investors welcome political stability. The uncertainties regarding the impact of Brexit and even more so erratic behaviour of the spectacularly unpredictable occupant of the White House are not conducive to long term investment decisions, particularly if one of the outcomes is a US trade war with the EU. Although there is the possibility of some displacement to Europe of capital that would otherwise have invested in the US, this is very difficult to quantify. The displacement of financial services activity from London to Luxembourg post Brexit is also hard to quantify. The banking activity that is certain to move from London is more likely to head to Paris or Frankfurt. Luxembourg is more likely to be a beneficiary of investment management business, but for this there is an open question as to how much incremental activity there is that does not already take place in Luxembourg. My own view is that both the UK and the rest of the EU are already net losers from the loss of momentum in moving forward the Capital Markets Union following the resignation of Lord Hill as the UK's commissioner immediately after the vote (we have covered this in previous newsletters).


Although it is difficult to determine how much investment fund business might transfer from London to Luxembourg, exit from the EU coupled with tax changes under the OECD Base Erosion and Profit Shifting (BEPS) initiative may result in more people and business infrastructure being located in Luxembourg to undertake the same level of business. The UK leaving the EU without access to passporting may also limit the return of activity to the UK from Luxembourg as a response to the BEPS initiative.

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