The return of tangible assets – as compartments
The recent easing of interest rates has improved the outlook for many tangible asset investments over the past few months, leading to a resurgence in demand for property and related assets. “We are now seeing that the pent-up demand is primarily being met by way of compartments”, says Daniel Knoblach, Board Member of Super Global Services SA.
The market for traditional tangible assets, particularly real estate, has rebounded, with demand nearly reaching levels seen about five years ago. “Over this period, significant pent-up demand has accumulated, especially among institutional investors, and it is now being met”, explains Knoblach. This time, however, the focus is shifting away from direct investments or funds and towards securitisations structured as compartments under Luxembourg law. “This shift is also driven by the speed at which tangible asset investments can be brought to market”, adds Knoblach.
More importantly, the regulation of Luxembourg compartments now provides highly favourable conditions for the securitisation of tangible assets, positioning them as a superior alternative to traditional funds. “I am confident that we will see a growing shift away from funds in favour of compartments in the coming years”, Knoblach points out. In key areas such as cost efficiency, transparency and security, compartments are on par with funds and, in some cases, even offer distinct advantages.
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“The securitisation structure is ideal for many investors”, says Knoblach. It not only makes tangible assets suitable for deposit, making them accessible to a wider range of investors, but it also meets regulatory requirements through stock exchange listings or ratings. “Additionally, tangible assets can be used as security assets”, Knoblach adds. This is thanks to the regular independent assessments and annual audits conducted by external auditors, a level of scrutiny and compliance that enhances their appeal and reliability for investors.
The trend in tangible assets is shifting away from soft assets like classic cars and art. “We are clearly seeing a movement toward real property with a strong ESG focus”, says Knoblach. “Investors are particularly interested in the ‘S’ – the social aspect of ESG.” In the real estate industry, this often includes projects in the social housing sector, student accommodations or care facilities. “These tangible assets are frequently structured as ESG or green bonds, allowing them to meet multiple criteria simultaneously”, Knoblach explains. “Investors can achieve their ESG objectives, diversify their portfolios with tangible assets and generate a solid return.”