EPRA champions listed property as catalyst for European revival

The European Public Real Estate Association (EPRA) has welcomed the European Union initiative to revive the region’s economy, which it sees as an opportunity to place the listed commercial real estate sector at the heart of efforts to boost growth and job creation.

Investment in buildings, commercial property, housing and infrastructure totals €1 tln a year, or 60% of capital investment in the European economy. The EU recognised this key contribution in its Green Paper consultation on the long-term financing of the economy.

Real estate in all its forms accounts for nearly 20% of activity in the region and employs more than four million people.

EPRA Chairman David Atkins commented: 'Property and infrastructure provide the platform for any economy to function efficiently, and should form a major part of these proposals. The EU listed property sector is a proven leader in delivering high quality accommodation for businesses and residents; engaging with communities over the long term;
and meeting environmental challenges.

'European quoted real estate companies are simple, transparent and accessible to the broadest range of investors. They are ideal for efficiently channelling long-term capital into the built environment, and contributing to the EU’s growth agenda. The relatively small size of the EU sector compared with other global regions represents an outstanding opportunity for the European Commission to enhance the EU’s competitiveness and boost jobs and job creation.'

The Global Financial Crisis highlighted Europe’s over-reliance on bank lending, triggering the EU’s reflection on finding alternative sources of long-term finance and how to channel it to support sustainable economic growth and job creation. The EU began its consultation in March with the Green Paper.

EPRA said regulatory and market barriers are holding back the potential contribution that listed real estate companies, including REITs, can make. Europe’s listed property sector developed, owns and operates 2% of the region’s investible commercial real estate, which is proportionately three to four times smaller than in Asia or the US.

In its response to the Green Paper, EPRA recommended seven steps to help the listed property sector develop, such as establishing REIT regimes in the 19 EU countries without them and technical measures to allow mutual recognition of REITs within the EU and reduce cross-border inefficiencies.

As the body representing European publicly listed real estate companies with €250 bn of assets, EPRA also urged that REITs and property companies are not misclassified as ‘funds’ or ‘financial’ business in the new wave of regulation; instead they should be recognised as fully integrated commercial operating businesses, EPRA said.

Atkins concluded: 'This is a welcome initiative from the EU as it seeks smart and effective ways of lifting growth and employment. The characteristics of listed real estate fit perfectly with the objectives outlined in the Green Paper and the sector is able and willing to make a meaningful contribution to achieve these goals. We hope this potential catalyst will feature in the EU’s plans.