GERMANY - The German government has passed new regulations for open real estate funds (OIFs) that will include a minimum two-year holding period.

OIFs suffered major outflows during the financial crisis, forcing some of them to close.

Once the law is implemented, all new investors in open real estate funds will be subject to a two-year minimum holding period.

However, despite the rule, investors will be able to withdraw sums of up to €5,000 per month - the average in- and outflow for a typical private investor.

The investment association BVI said: "These new regulations will in effect separate institutional from private investors."

Stefan Seip, managing director at BVI, added: "For private investors, OIFs will remain liquid investments, while institutional investors and people investing larger sums will have to make a longer-term commitment."

The BVI is hoping for further amendments to consumer protection rights regarding OIFs in the parliamentary discussion of the bill.

The association would like to see a separate fund category for large investors and bonuses for non-withdrawals.

In the first seven months of 2010, open real estate funds saw €2.7bn of inflows, making them one of the most popular investments among Germans, the BVI said.