GLOBAL - The European Public Real Estate Association (EPRA) and National Association of Real Estate Investment Trusts (NAREIT) are extending its joint venture with the FTSE Group to develop a series FTSE EPRA/NAREIT Global Real Estate indices also covering the emerging markets.
The decision to expand the indices is in response to the growing demand among investors to exploit real estate opportunities in emerging markets as they rapidly grow, according to officials.
With 80% of the world's population living in developing countries such as India, China, Russia, Brazil and Argentina, the FTSE Group claims listed real estate is attracting strong interest from investors.
"With the planned launch of the FTSE EPRA/NAREIT Emerging Markets Index Series, investors will soon have the tools to accurately track the development of these markets for the first time," said Mark Makepeace, chief executive of the FTSE Group.
The methodology for calculating the new indices mirrors that of the existing FTSE/EPRA/NAREIT indices currently covering the developed countries and looks at minimum free float market capitalisation, liquidity and ‘EBITDA' (earnings before interest, taxes, depreciation and amortisation) as well as contributions from relevant real estate activities.
Real Estate Investment Trusts (REITs) are expected to form the main investment vehicle that will allow the new indices to track their markets efficiently.
"We believe that REITs and other listed real estate will take off in emerging markets, as they have in most of the major developed countries, because of the overwhelming economic and financial benefits of their structures," said Philip Charls, chief executive of EPRA - the Amsterdam-based association representing over 200 of Europe's real estate investments groups and over €300bn in assets under management.
Steven Wechsler, president and chief executive officer of NAREIT, the US-based global organisation representing REITs, added the decision to expand into emerging markets was a logical step forward.
"The Emerging Markets Index Series is an important step in our ongoing effort to provide investors with access to the entire opportunity set of global real estate investment, using the efficiency of publicly-traded real estate securities," said Wechsler