EUROPE - EPRA is taking a two-pronged approach to bolster the European listed real estate market by highlighting its significance to the region's economy and by persuading institutional investors of the benefits of investing in REITs.
Philip Charls, chief executive at the European Public Real Estate Association (EPRA), told delegates at the annual conference in Berlin that the organisation was embarking on a campaign to raise the profile of the industry to governments, regulators and the public, especially in Europe's largest economy Germany.
He said the listed property sector was not properly understood by politicians and the public, something EPRA is aiming to address.
Germany will be a principal target given its relatively small listed property market, and Charls said legislative proposals to prohibit new open-ended real estate funds would create an opportunity for REITs to "fill the gap" left behind.
Charls also said the listed sector was in a position to provide a solution to the distressed property markets in Europe, citing a new report by Alex Moss, managing director of Consilia Capital, on parallels with the US savings and loans crisis of the 1990s, which acted as the catalyst to the development of the REIT market there.
The association also formerly launched research by Maastricht University that shows pension funds throughout the world have damaged their real estate investment performance by dismissing REITs in favour of the private market.
The report by Aleksandar Andonov, Piet Eichholtz and Nils Kok argues that pension funds have been compromising on performance, cost, transparency and liquidity as a result of investing in direct real estate or non-listed funds.
The paper, 'Value Added From Money Managers in Private Markets? An Examination of Pension Fund Investments in Real Estate', used the CEM dataset, which covers 884 European, North American, Australian and New Zealand pension funds, between 1990 and 2009.
It concluded that the longer the investment chain in real estate the less sense it made for institutional investors to use it, with multi-layered funds of funds the least beneficial approach.
Speaking at a press conference prior to the main event, Maastricht University's Nils Kok cited US pension funds as a case in point, saying they had underperformed their peers because of their reliance on third-party consultants to select real estate funds.
EPRA's head of research Fraser Hughes said the report was part of a growing body of external research the association had been "piecing together" to convince institutional investors to consider investing in real estate.
Patrick Kanters, global real estate managing director at APG, told delegates how the Dutch pension fund asset manager treated listed property as an effective proxy for the direct market.
"We don't really care whether it's listed or non-listed, as it's all basically the same," he said.
But Olivier Piani, chief executive at Allianz Real Estate, said his organisation was not investing in listed real estate, principally because the insurance group was seeking to reduce its overall exposure to volatile equities.
Piani acknowledged that Allianz Real Estate was a long-term investor, but said the Allianz Group - itself a listed company - would ultimately be affected by the short-term volatility.