New regulations sap resources

The wave of new European regulations set to come into force is draining property companies' financial and human resouces, according to the Emerging Trends report.

Almost 60% of respondents to the survey cite regulation as the biggest issue for 2013. The plethora of new rules - from the Alternative Investment Fund Managers Directive (AIFMD) to Basel III - is ‘undermining entrepreneurship’, creating ‘distortions between geographies’, and requires ‘ever larger teams of people’, ‘new IT systems’, and increased financial capacity.

Lack of clarity on implementing the Solvency II regulations across Europe means continued costs and uncertainty for insurers. ‘Out of 45 employees, seven to eight spend all of their time on regulation...We no longer have the time to work and to create value,’ says one respondent.

Bankers are also concerned, with 80% citing regulation as an issue of concern. According to one interviewee, regulatory capital requirements imposed by the Basel III regulations had forced his firm out of property lending. Across the board, interviewees are feeling ‘indirect effects’ of Basel III on the debt market in the form of increased costs and lack of debt as banks price the regulation into deals.

Fund managers are similarly worried, with many predicting more consolidation. ‘European regulators don’t understand the impact on the property industry and don’t want to.’

Click on the pdf below to read our roundup of key points from the Emerging Trends report