Reuters, Thursday March 13 2008BRUSSELS, March 13 (Reuters) - New European Union rules to create a single market in real estate funds will be considered after a study showed many barriers need scrapping, the bloc's top market regulator said on Thursday.
The EU market for retail open-ended real estate funds has more than doubled over the past decade, riding on the back of a multi-year property boom in several EU states like Britain, Spain and Ireland.Cooling house prices are taking the shine off many of the funds, however.
EU Internal Market Commissioner Charlie McCreevy asked industry experts to look at whether regulatory barriers needed lifting to allow a pan-EU market in real estate funds to flourish, give investors more choice and drive down fees.Twelve of the bloc's 27 members have national rules overseeing how retail investors may invest in open-ended real estate funds.
Divergent national rules were holding back the development of the sector on a cross-border basis and possibly limiting investor choice, the study said.EU legislation was needed to allow the funds to be offered in all states and this could be extending EU rules on mutual funds, known as undertakings in collective investment in transferable securities or UCITS, the study concluded.
"We will study carefully the business case for action presented by the group and their recommendations on the need for new EU legislation to overcome market access barriers," McCreevy said in a statement.The Commission will hold a hearing in Brussels on April 8.
The European Fund and Asset Management Association said the study backed its longstanding call for EU law to create a single market in open-ended real estate funds."Retail investors could benefit from a wider range of investment products, and real estate funds could realise higher economies of scale and achieve more diversification, further helping investors achieve their investment goals," EFAMA President, Mathias Bauer said.
There should be a separate EU framework for real estate funds rather than adding them to the UCITS rules, EFAMA said.Retail investors in Britain have been pulling money out of property funds that have been hit by falling house prices. (Editing by David Cowell)
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