Germany tightens fund rules as open-ended property sector bleeds billions

New liquidity management requirements for German open-ended property funds came into force on 16th April 2026. The timing could hardly be more pointed: the sector is simultaneously recording its most sustained period of outflows in years and facing a deepening debate about whether its structural design remains fit for purpose in a changed market environment.

The new rules stem from the EU's AIFM II Directive (Directive (EU) 2024/927), transposed into German law through the Fund Risk Limitation Act (FRiG). From 16 April, fund managers of open-ended alternative investment funds are required to select and implement at least two liquidity management instruments for each fund under management, and to draw up a formal liquidity management plan. Full technical standards, which will specify the permissible parameters for those instruments and how they must be calibrated, will follow via a Level 2 Regulation on 16th April 2027.