# Open-Ended Real Estate Funds Under Increased Liquidity Pressure > Open-ended real estate funds face liquidity pressure in 2026. This article explains redemption restrictions, suspensions and investor impacts. Source: https://www.mtrlegal.com/en/open-ended-real-estate-funds-increased-liquidity-pressure/ · Language: en · Updated: 2026-11-05 --- ## Open-Ended Real Estate Funds Under Increased Liquidity Pressure In 2026, eight open-ended real estate funds suspended the redemption of their units. Four of these funds are being wound up. A further fund has imposed a pro rata redemption restriction. Both suspension and such redemption restrictions are statutory mechanisms intended to protect investors. According to the [Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, German Federal Financial Supervisory Authority)](https://www.bafin.de/SharedDocs/Veroeffentlichungen/DE/Fachartikel/2026/fa_261105_offene_immobilienfonds.html), the situation is challenging for those affected but does not constitute a failure of the system. Rather, the measures are intended to prevent individual redemptions from disadvantaging the remaining investors or requiring properties to be sold under considerable time pressure. ### Market Volume and Affected Funds In June 2026, there were a total of 43 open-ended retail real estate funds in Germany. At that time, their combined assets amounted to approximately EUR 108 billion. More than 80 percent of this amount was attributable to retail investors. For many people, such funds form part of their retirement provision. The eight funds that had suspended unit redemptions managed a combined total of approximately EUR 2.9 billion. This represented less than three percent of the overall market. According to BaFin, market-wide liquidity remained above the statutory minimum ratio. However, individual funds were under considerable pressure. Since August 2023, outflows from open-ended real estate funds have exceeded newly invested amounts. In August 2026, net outflows amounted to approximately EUR 611 million. In addition, the fund management companies had already received numerous redemption notices for the following months. ## Interest Rate Trends and Declining Property Values ### Changed Market Conditions Since 2022 The pressures affecting [open-ended real estate funds](https://www.mtrlegal.com/wiki/offener-immobilienfonds/) are partly attributable to the economic environment. Since interest rates began rising in 2022, instant-access savings accounts and bonds have become more attractive. The military escalation in the Middle East led to a further rise in interest rates in 2026. At the same time, the prices of numerous commercial properties declined. The losses in value were particularly pronounced for properties used predominantly as office premises. Changes in the world of work also contributed to this trend. Properties of this kind accounted for approximately 60 percent of the buildings held by open-ended retail real estate funds. In addition, transaction volumes in the real estate market were significantly lower. This made it more difficult for fund management companies to sell properties at short notice and on reasonable terms. ### Redemption Rights Versus Long-Term Asset Commitments The structure of open-ended real estate funds combines the option of redeeming units with assets that are predominantly committed for the long term. As a general rule, investors may redeem their units with the fund management company. However, the fund assets consist primarily of properties that generally cannot be sold at short notice. As long as inflows and redemptions remain approximately balanced, this relationship generally does not cause significant difficulties. However, if many investors request the redemption of their units at the same time while little new capital is flowing into the fund, available liquidity may decline. The fund management company may then have to sell properties in a market with limited demand. ## Statutory Liquidity Management Tools Following the financial crisis of 2007 and 2008, the rules governing open-ended real estate funds were tightened. The stipulated safeguards operate in stages. They are intended to prevent redemptions by individual investors from economically disadvantaging those who remain invested in the fund. At the same time, these tools are intended to give the funds sufficient time to sell properties in an orderly manner. This is designed to avoid sales under considerable time pressure and potentially below the previously assessed value. ### Liquidity Reserve Every open-ended real estate fund must hold at least five percent of its assets in liquid form. Under ordinary market conditions, redemption requests are met from this reserve. ### Minimum Holding Period and Notice Period Units in open-ended real estate funds are subject to a minimum holding period of 24 months from the date of acquisition. Units acquired after 21 July 2013 are additionally subject to a twelve-month notice period. As a result of the notice period, the fund management company generally knows one year in advance which redemption amounts will fall due. This facilitates liquidity planning but does not prevent numerous redemptions from falling within the same period. ### Redemption Fee and Pro Rata Redemption Restriction Since April 2026, fund management companies have generally been required to provide for at least two liquidity management tools. The relevant obligation is set out in [§ 30a Abs. 1 Kapitalanlagegesetzbuch (KAGB, German Capital Investment Code)](https://www.gesetze-im-internet.de/kagb/__30a.html). The available tools include a redemption fee and a pro rata redemption restriction, also known as gating. When gating is activated, the fund management company fulfils each redemption order only up to a specified proportion. The same ratio applies to all investors. Payments therefore continue to be made, albeit more slowly than in the case of full redemption. The unpaid portion of a redemption order must generally be resubmitted for redemption. Spreading redemptions over time is intended to prevent the fund management company from having to sell properties at short notice. The fund mentioned by BaFin as having activated a redemption restriction is the open-ended real estate fund “grundbesitz europa” managed by DWS Grundbesitz GmbH. According to the company’s announcement, the pro rata restriction took effect on 27 October 2026. ### Suspension of Unit Redemptions If the preceding tools are insufficient, the fund management company may or must suspend the redemption of units. The relevant provision is § 257 Kapitalanlagegesetzbuch. The suspension provides time for orderly property sales and ensures that all investors are treated equally. Without such a measure, the first redemption orders received could be fulfilled in full, while any losses would be borne solely by the remaining investors. The duration of the suspension is limited to a maximum of 36 months. ### Winding Up the Fund If sufficient liquidity is still unavailable after the permitted suspension period has expired, the fund management company must wind up the fund. In this case, the properties are sold and the proceeds generated are distributed to the investors. According to BaFin, four of the eight funds whose unit redemptions were suspended in November 2026 were already being wound up. ## Consequences for Investors ### Gating Results in Payments Being Spread Over Time Under a pro rata redemption restriction, investors initially receive only part of the amount earmarked for redemption. The tool is intended to help avoid a complete suspension of unit redemptions. The investment in the fund continues in respect of the units that have not been redeemed. Whether and to what extent a new redemption notice is required depends on the rules applicable to the fund concerned. ### Suspension Locks Up the Invested Capital During a suspension, investors are temporarily unable to redeem their units with the fund management company. The invested capital remains locked up for this period. The investment in the fund itself continues. As ring-fenced assets, open-ended real estate funds are segregated from the fund management company’s own assets. However, this segregation does not prevent losses in value. The prices obtained in a sale may be lower than the previous valuations, meaning that investors may lose part of the capital invested. ## Supervision by BaFin ### Monthly Analysis and Enhanced Monitoring BaFin has intensified its monitoring of open-ended real estate funds since the interest rate reversal began. Each month, it analyses cash flows and announced redemptions for all open-ended retail real estate funds. Funds experiencing liquidity constraints are subject to more intensive monitoring. BaFin also reviews the fund management companies’ liquidity management. This includes special audits. The supervisory authority regularly liaises with the companies concerned. Its supervision focuses in particular on ensuring that: - Properties are valued appropriately. - Sales take place on reasonable terms. - All investors are treated equally. - Affected persons are informed promptly about material developments. ### Responsibility of the Fund Management Company The fund management company has detailed information regarding the available liquidity, the redemption notices received and the sale options available to the fund concerned. On this basis, it decides whether to activate a redemption restriction or suspend unit redemptions. If the available funds are insufficient to meet redemptions, the fund management company is required to suspend them. BaFin monitors whether the subsequent measures comply with the statutory requirements and take investors’ interests into account. ## Risk Factors of Open-Ended Real Estate Funds Open-ended real estate funds are designed for a medium- to long-term investment horizon. An investment is subject to fluctuations in value and risks of loss. In addition to the minimum holding period and notice period, a redemption restriction or suspension may result in the invested capital remaining locked up for longer than initially expected. The following factors are particularly relevant when assessing an investment: - The intended investment horizon must take account of the minimum holding period and the notice period. - The value of fund units may decline; a total loss of the capital invested is also possible. - The key information document and sales prospectus contain information on costs, risks and the stipulated liquidity management tools. - Concentrating a substantial proportion of assets in a single fund or asset class increases dependence on its performance. The suspension or restriction of unit redemptions may raise significant economic and legal issues, particularly with regard to redemption notices, investment documentation and the specific structure of the investment. MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on such matters. Further information is available under [Legal Advice on Capital Markets Law](https://www.mtrlegal.com/rechtsberatung/kapitalmarktrecht/).