MUNICH - The market for securitised real estate loans is set to explode to $ 1 trillion within the next ten years, according to Robert Grassinger, board member of Hypo Real Estate Bank International. The increase will be fuelled largely by the growing popularity of this type of financial instrument in Europe, he said at a conference at the Expo Real trade fair in Munich on Tuesday.
MUNICH - The market for securitised real estate loans is set to explode to $ 1 trillion within the next ten years, according to Robert Grassinger, board member of Hypo Real Estate Bank International. The increase will be fuelled largely by the growing popularity of this type of financial instrument in Europe, he said at a conference at the Expo Real trade fair in Munich on Tuesday.
'Europe is now growing just like the US did ten years ago', Grassinger commented. At present the UK dominates the European market with 76% of the transactions in 2005 completed by British players. 'But this year we're also seeing some Germans enter this market', Grassinger said.
The number of players interested in securitised real estate loans has grown enormously in the past few years, said Allan Saunderson, managing editor of Property Finance Europe. 'In 1999 the Economist counted three banks purchasing this type of credit. In June 2006 there were 76 players such as opportunity funds and hedge funds active in this market. There is a large appetite for this type of financial instrument.'
The 'wall of money' flooding the European property sector is having a favourable effect on financing rates, Grassinger said. 'It is pushing prices down. Prices are lower today than ten, and even three years ago. There is also a development towards more detailed structuring of this types of credit.'
