EUROPE - Pre-crisis property fund structures developed in the boom years are no longer fit for purpose in the post-crisis environment, according to PwC.

The firm's survey of 30 European vehicles claims new types of funds designed for specific kinds of investors will emerge with the market recovery, including arrangements that "blur the boundaries between what was traditionally regarded as the fund and what was traditionally regarded as a segregated account".

Its authors attributed the predicted emergence of new vehicles to a combination of regulation - notably AIFMD and Solvency II - and changes in investor behaviour. 

PwC real estate funds partner John Forbes also cited as a driver the shift from defined benefit to defined contribution (DC) pension schemes, which he said would lead to an increase in demand for open-ended vehicles offering liquidity and daily pricing - and potentially daily trading.

Given the continued hard fundraising environment, Forbes acknowledged the report's medium-term forecasts would happen only gradually - though he cited as evidence of the impact of the shift to DC pension schemes CBRE Investors' launch in May of the first DC real estate fund.

"It's a constant process of evolution," he said.

Forbes told IP Real Estate that fund managers would likely create products with new characteristics based on existing national structures included in the pan-European survey.

Most were created in the 2000s, such as the Austrian Immobilien-Sondervermögen in 2003 and the French OPCI-SPPICAV in 2005. Some originate even earlier, such as the Italian real estate investment fund structure created in 1994.

The specific local characteristics of some structures may make them less applicable to cross-border investors, including the non-UCITS central bank-regulated Czech Specialni Fond Nemovitosti.

Yet others - including the FCP and Luxembourg SICAV structures - have already proven attractive to investors from outside their national jurisdictions.

Forbes said: "It will be up to each fund manager to decide on a specific structure on a case-by-case basis."

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