The European Public Real Estate Association (EPRA) is pursuing greater mutual recognition between Europe’s different real estate investment trust (REIT) regimes as part of a broader effort to make listed real estate more accessible to investors and mobilise capital for Europe’s housing needs.
Dominique Moerenhout, CEO of EPRA, said the association’s long-term ambition remained the creation of a single European REIT regime, but acknowledged that political integration across the EU made a fully harmonised system difficult to achieve in the near term.
“We’ve been dreaming for many years to create what we call a European REIT regime,” Moerenhout told EPRA’s annual conference in Milan this week. “We just need to be realistic that today, unfortunately, we are not the United States of Europe.”
EPRA is therefore exploring “different avenues” towards that objective, including mutual recognition between national REIT regimes. Moerenhout said this was particularly important because more than half of EPRA’s corporate members are multinational companies operating across borders. Greater integration could support their growth while making European listed real estate more accessible to a broader pool of investors.
The issue is becoming more pressing as listed real estate competes with infrastructure, government bonds and private credit for institutional capital. Investors are becoming more selective, while the subdued transaction market and higher cost of capital have increased the importance of scale, liquidity and access to financing.
Stéphane Boujnah, CEO and chairman of the managing board of Euronext, offered a similarly blunt assessment when asked about the prospect of a single European REIT regime. “Anything that starts with ‘single’ would represent an improvement,” he said, pointing to the particularly local nature of European real estate law.
The European real estate industry needs to become more vocal in pushing for reforms that deepen capital markets, reduce fragmentation and make it easier to raise and deploy capital across borders, Boujnah added. “If you don’t take care of politics, politics will take care of you,” he said.
EPRA’s push for greater integration also comes as it seeks to strengthen the role of listed real estate in addressing Europe’s housing shortage. The association established a Housing Working Group two years ago and has since stepped up engagement with the European Commission and European Parliament. Moerenhout said the group’s recommendations had contributed to a European Parliament report recognising the strategic role listed real estate can play in tackling the housing crisis.
Speaking during the conference’s housing panel, Irene Tinagli, MEP and chair of the European Parliament’s Special Committee on the Housing Crisis in the European Union, said the scale of the shortage meant that neither the public nor private sector could solve the problem alone. “We need private capital to address the challenge, which is huge. There are certain things that the public sector alone can’t do.”
The EU faces a shortfall of around 10m homes, according to Borja Giménez Larraz, MEP and rapporteur to the Special Committee on the Housing Crisis in the European Union. In an attempt to increase supply, Giménez Larraz said European policymakers were seeking to reduce building permit times to 60 days, while considering proposals including a simplification package for construction regulations and a reform of the VAT Directive that could allow a super-reduced value-added-tax rate of below 5% for housing construction and renovation linked to social policy.
Eddie Byrne, CEO of Irish residential REIT IRES, argued that listed companies provide a particularly important source of “permanent capital” because, unlike some other forms of investment capital, it is not designed to be returned or recycled after a fixed period. He said the sector could provide a long-term source of funding for housing if governments created a more predictable regulatory and investment environment.
“The listed sector is what needs to step into the state’s shoes if we’re going to have a permanent solution to the housing crisis,” Byrne said. “You can say what can the listed sector do, but I think the state needs to do a lot more. And that means simplifying regulation and making it more attractive for that permanent capital to come in.”
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