REAL ESTATE – The introduction of UK and German retail estate investment trusts could boost result in $100bn in extra capital entering the market, says Standard & Poor’s.
“The introduction of U.K. and German tax-efficient real estate investment trust (REIT) regimes could mean more than $100bn in additional market capital over the next five years alone, and is likely to result in increased capital market activity for the European real estate sector,” S&P Ratings Services said.
It’s issued a report - "Rise of the REITs in Europe” – which says the number of listed real estate companies in Europe is set to increase “significantly” with the expected REIT launch in the UK and Germany.
The new legislation would increase alternative real estate investment opportunities for individuals and institutional investors.
"Tax-exempt status should enable property companies in the U.K. and Germany to enjoy better equity performance while maintaining a fairly conservative approach, by holding assets for the long term and limiting exposure to speculative developments," said analyst Peter Tuving.
It added that tax-efficient vehicles are seen as an important tool for stimulating the growth and development of a listed real estate investment market.
“The establishment of a liquid and transparent real estate equity investment class provides access for small investors to participate in commercial property, which is characterized by stable rental returns and predictable distribution returns.
“Direct investments in commercial real estate are heavily capital-intensive and burdened by administrative costs and leasing campaigns, which make them available only to large investors such as real estate companies, funds, and financial institutions.”