Germany has officially joined the growing club of European countries with a tax-friendly real estate investment trust (REIT) after German president Horst Kohler signed the G-REIT law on Thursday. The law, ratified by the German parliament last March, is now effective retroactively to 1 January 2007. Several property companies in Germany are poised to convert to REITs and researchers at Degi, the property investment arm at insurer Allianz, have rated 10 property firms and eight private investors as G-REIT candidates.
Germany has officially joined the growing club of European countries with a tax-friendly real estate investment trust (REIT) after German president Horst Kohler signed the G-REIT law on Thursday. The law, ratified by the German parliament last March, is now effective retroactively to 1 January 2007. Several property companies in Germany are poised to convert to REITs and researchers at Degi, the property investment arm at insurer Allianz, have rated 10 property firms and eight private investors as G-REIT candidates.
The UK has also had a REIT structure since the start of the year. Reita, the UK promotional body for REITs, has welcomed the introduction of a similar structure in Germany. Dave Butler, Reita's programme coordinator commented: ' Germany is Europe's largest economy and is the third largest real estate market in the world but it is under-represented in the listed arena with only 0.5% of it's commercial real estate being available to investors via the stock market.'
He said the introduction of the G-REIT should encourage the creation of a significant listed German property sector and will have a number of advantages including speeding the transfer of property from German corporate ownership and helping the restructuring of German industry. It will also pave the way for institutional investors to restructure their portfolios and will provide an exit for the open-ended and closed-ended funds.
Noting it will also improve liquidity and transparency in the German market, Butler added: 'From an overseas investor perspective, Germany is an attractive market and has been number one on UK institutional investors shopping lists with some £4.5 bn (EUR 6.6 bn) worth of property purchased in recent years.'
REIT legislation already covers some 60% of the European sector. In Western Europe, the Netherlands has operated an equivalent FBI structure since the 1960s, France introduced its SIIC in 2003, and Belgium's SICAFI came into force in 2005. Spain, Italy and Finland also considering introducing REIT structures.
