Maintaining market access and avoiding new barriers are key issues identified by real estate industry body INREV as the UK prepares to leave the European Union.
The European Association for Investors in Non-Listed Vehicles, in its Guiding Principles for Future UK-EU Relations, highlights the “many questions regarding the future relationship” between the EU and the UK and a “number of important challenges”.
At the beginning of the year, CEO Matthias Thomas told a roadshow event in London that INREV was setting up a cross-sector committee to address the implications of Brexit.
This week, INREV announced: “We are committed to ensuring that the hundreds of billions of [euros that] institutional investors from around the globe have invested into the European economy through non-listed real estate vehicles is not restricted in the future and, moreover, that the sector can continue to flourish.
“Long-term investors, such as pension funds and insurance companies that provide capital, fund managers that invest that capital and European businesses that rely on that investment in real estate for their development, all have an interest, wherever they are located, in minimising the disruption of the UK decision.”
It said avoiding new barriers is about “making sure a future relationship between the UK and the EU preserves the flow of professionals, capital and investment between the two”.
“Whether this is through the extension of existing arrangements to the UK, or the negotiation of a bespoke regime, is a matter to be explored further,” INREV said. “But it is critically important that the UK’s exit from the EU does not create new barriers to these flows.”
A legal framework that both provides access to EU markets for long-term investors and fund managers in the UK and that allows those based in an EU member state the same access to the UK market is essential, the association said.
Rights already granted to market participants must be protected, the guidelines point out, with fund managers able to continue to manage and market, and investors to invest their capital across the European economy.
The principle of the free movement of capital, which prohibits restrictions to the flow of capital between EU member states, now acquires an even greater importance, INREV said.
The association said it is not in the EU’s or the UK’s interest to generate a ‘cliff edge’ effect, which “will only cause unnecessary disruption to markets, reduce economic activity and impact on growth and employment”.
It added: “Concerns regarding legal certainty for all stakeholders could be addressed for example through the use of transition periods or grandfathering provisions.
INREV said: “While it is inevitable that significant resources and attention will now have to be devoted to the renegotiation of the UK’s relationship with the European Union, this must not be allowed to derail or delay policy initiatives designed to boost private investment and generate growth that are already envisaged.
“The case for a Capital Markets Union, removing barriers to cross-border and long-term investment remains strong.”