A coalition of European real estate industry bodies is lobbying the European Commission for an EU framework for real estate investment trusts (EU REIT). This framework would tackle obstacles to cross-border property investment and enhance market security and stability.
A report by Maastricht University released last month revealed flaws in cross-border property investments that the new framework would address. It said there are increasing distortions of competition as national REITs multiply. The report showed that savers in small member states cannot access good quality property investment in other member states or even the prime property investments in their own countries.
The report also said that an EU REIT would be an opportunity to "buttress market safety and security. Simply by ensuring a properly functioning internal market for real estate investment, the EU can make a major contribution to the control and stabilisation of property markets."
The preferred structure for the framework was outlined in the report. No invasive tax harmonization would be necessary.
Piet Eichholtz, a professor of real estate finance at Maastricht University and leader of the research team, said, "The academic literature and additional empirical evidence presented in our report highlight the very arbitrary nature of differences in national REIT structures in Europe and provide strong and fundamental arguments for the creation of an EU REIT."
He added, "The EU REIT does not have to be created from scratch. Both in the EU and outside of it, there is a lot of experience with these regimes, and careful analysis of this experience provides direction towards an optimal pan-EU structure."
Jon Young
