EUROPE: Call for EU-regime for retail Real Estate Funds

Thursday March 13 2008

The European Commission has published an industry report analysing the EU market for open-ended real estate funds, which provide investors with access to professionally managed investments in commercial and other types of property. The report calls for the introduction of EU legislative arrangements to provide cross-border retail distribution of open-ended real estate funds – these funds are currently excluded from the UCITS Directive.

The report was prepared by the expert group on open ended real estate funds. This group was announced in the Commission’s White Paper on the enhancement of the EU framework for investment funds. The report will be publicly debated at an open hearing in Brussels on 8 April 2008. The report and stakeholders’ reactions to it will contribute significantly to the policy debate on whether regulatory barriers need to be removed to facilitate development of a cross-border EU market for open ended real estate funds. In particular, it constitutes an important input to the forthcoming Communication on non-harmonised investment funds, scheduled for publication in autumn 2008.

The report can be found at the above link.

Background

Assets managed by regulated real estate funds have more than doubled over the last 10 years. Open-ended real estate funds are now subject to retail investment fund regulations in 12 Member States. This report highlights the fact that divergent national rules create regulatory fragmentation in the EU, holding back further development of this business on a cross-border basis and possibly limiting the range of investment choices available to consumers.