Total trades in the UK Commercial Property Derivatives market grew to £4.68 bn (EUR 6.94 bn) by the end of 2006, according to the IPD Annual Index. The total volume for 2006 was £3.57 bn, a 300% increase over the previous two years.
Total trades in the UK Commercial Property Derivatives market grew to £4.68 bn (EUR 6.94 bn) by the end of 2006, according to the IPD Annual Index. The total volume for 2006 was £3.57 bn, a 300% increase over the previous two years.
The IPD said the end of 2006 marked a watershed in the development of property derivatives as banks and their counterparties looked further ahead and began trading not only on the IPD's other European indices but also added options to their list of products traded.
Though only a relatively small number of non-UK deals were concluded, it is widely expected that the volume of traded continental European property derivative business will grow steadily over the coming 12 months. 'Traditional direct property investors increasingly understand the benefits of using property derivatives and this is beginning to help drive derivative volumes,' IPD Chief Economist Sabina Kalyan said. 'The growth should continue as this knowledge spreads through Europe and opinions about the future direction of the property market diverge.'
Three more banks - Morgan Stanley, Abbey Financial Services and BNP Paribas - have all signed licenses to trade property derivatives referencing IPD indices, to add to the 12 existing ones.
