“ESG should be treated as a systemic challenge”

In your opinion, what factors make real estate investment more complex today compared to ten years ago?

Several factors have contributed to the increased complexity of real estate investment today compared to a decade ago. 

First, economic volatility has introduced significant uncertainty into investment planning. Inflation, central bank policy shifts, and broader geopolitical instability have made financing less predictable and cash flow forecasting more challenging. In Luxembourg, although there are signs of resilience, the economy remains in a fragile recovery phase. Limited access to financing is now one of the most pressing challenges facing the real estate sector.

Second, construction costs have risen substantially, particularly for materials. This persistent increase has compressed margins and affected sellers' return expectations. As a result, there's growing interest in building rehabilitation and renovation projects, which often present more cost-effective and sustainable alternatives.

Finally, the growing influence of external factors - including regulatory changes, technological advancements, and evolving ESG (Environmental, Social, and Governance) expectations - has transformed the investment landscape. Stricter environmental, zoning, and tax regulations, combined with increased pressure to meet ESG criteria, have made real estate transactions more complex. ESG considerations are no longer optional; they are reshaping market demand and deal structures across the board.

How can legal and tax frameworks effectively support ESG objectives while fostering, rather than hindering, innovation?

Legal and tax frameworks can play a pivotal role in aligning ESG goals with innovation by adopting a balanced and forward-looking approach.

This involves three key strategies: targeted incentives, integrated policy design, and transparent governance. Incentives - such as tax credits, deductions, or accelerated depreciation for green investments - can encourage companies to adopt sustainable practices. At the same time, integrating ESG objectives into broader regulatory and fiscal policy frameworks helps ensure consistency and clarity across sectors.

Crucially, ESG should be treated as a systemic challenge, requiring collaboration between legal, financial, and operational actors. When ESG goals are embedded in a stable, innovation-friendly framework, they become drivers of progress rather than barriers to growth.

As a partner of this event, what do you consider to be the most valuable outcome of bringing together professionals from the real estate and financial sectors?

This event offers far more than just networking - it’s a platform for dialogue, partnership, and shared progress.

Bringing together professionals from both the real estate and financial sectors creates a unique opportunity to align perspectives, tackle common challenges, and unlock new opportunities.

In today’s rapidly evolving landscape - marked by economic uncertainty, regulatory shifts, climate risks, and technological disruption - cross-sector collaboration is not just valuable, it’s essential.

The real value lies in the exchange of ideas that lead to actionable solutions, and in forging partnerships that turn a shared vision into long-term value creation for all stakeholders.

This article was first published by Paperjam and written by Paperjam Club.