ESMA issues advice on proposals for leverage limits on real estate funds in Ireland


The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has issued its advice on proposed leveraged limits by the Central Bank of Ireland (CBI) on Irish real estate funds.

ESMA’s advice concludes that the conditions for taking actions under the Alternative Investment Fund Managers Directive (AIFMD) are met and that the proposed measure is justified and should contribute to improving the resilience of real estate funds and to limiting the build-up of risk in the commercial real estate (CRE) sector.

In the advice ESMA recommends that the CBI closely monitors the evolution of the Irish real estate sector to ensure the effectiveness of its measure and to assess the necessity to recalibrate the leverage limit.


On 3 November 2022, the CBI notified ESMA and the European Systemic Risk Board (ESRB) of its intention to impose leverage limits on Irish real estate funds. According to Art. 25(3) of the AIFMD, ESMA has to provide advice to the CBI, assessing whether the conditions for taking action appear to be met and whether the proposed measures are appropriate.

ESMA assessed the risks posed by Irish real estate funds and found that a significant number of them had elevated levels of leverage. For Irish real estate funds using leverage, such leverage is, on average, higher than in equivalent funds in the rest of the EU. In addition, considering the large market footprint of Irish real estate funds on the CRE market, these funds have the potential to amplify shocks affecting this market through disorderly asset sales, with broader macro-financial implications.

The CBI measure has been published today.


Further information:

Dan Nacu-Manole

Communications Officer

   +33 (0)1 58 36 52 06


More on the same topic