Some 75% of European insurance companies will revise their real estate commitments due to the Solvency II directive, according to the findings of a survey conducted by fund tracking firm Preqin.
Some 75% of European insurance companies will revise their real estate commitments due to the Solvency II directive, according to the findings of a survey conducted by fund tracking firm Preqin.
The EU legislation will have a significant impact on both direct and indirect real estate investment, respondents indicated.
About 26% of the survey respondents expect to make fewer commitments to private real estate funds and 16% said it was a contributory factor in their decision to stop investing in private real estate funds altogether.
European insurance companies are significant investors in real estate; Preqin identified over 90 European-headquartered insurance companies, managing combined assets in excess of EUR 315 bn, which invest in real estate. Some 44% of these have more than EUR 1 bn allocated to real estate investments.
'These results show that the Solvency II legislation will have a dramatic impact on the real estate investments of insurance companies based in Europe,' said Andrew Moylan, manager real estate data at Preqin.
'Those raising private real estate funds are likely to receive far fewer commitments from this group of investors, with many reducing or ending their allocations to such funds. The precise impact Solvency II will have on the real estate investments of insurance companies is unclear, and institutions are expecting to adopt very different strategies in response to the directive.'
