The market capitalisation of European real estate investment trusts (REITs) is set to triple to EUR 585 bn by 2011, according to Nick van Ommen, ceo of the European association of listed companies EPRA . Speaking at a conference on 'REITs, the new global emerging asset class' at the Expo Real trade fair in Munich on Monday, Van Ommen said the introduction of the UK and German REITs in 2007 will have a 'snowball effect' on other European countries. 'Europe has traditionally lagged behind the US and Asia. But the UK and German REITs are changing the face of the European market,' he said. 'Other countries will follow.'
The market capitalisation of European real estate investment trusts (REITs) is set to triple to EUR 585 bn by 2011, according to Nick van Ommen, ceo of the European association of listed companies EPRA . Speaking at a conference on 'REITs, the new global emerging asset class' at the Expo Real trade fair in Munich on Monday, Van Ommen said the introduction of the UK and German REITs in 2007 will have a 'snowball effect' on other European countries. 'Europe has traditionally lagged behind the US and Asia. But the UK and German REITs are changing the face of the European market,' he said. 'Other countries will follow.'
While Europe and the US are roughly comparable in size, the market capitalisation of listed REITs in Europe currently totals EUR 175 bn compared to EUR 400 bn for the US. Nevertheless, the European total is almost double the figure for 2001. 'There has been phenomenal growth in the past five years and Europe is still the place to be ,' Van Ommen said. 'Listed REITs offer predictable cashflows and low volatility. They are a fantastic asset class to have in an investment portfolio.'
Van Ommen sees great potential in Europe for governments to unlock funds currently held in real estate through the creation of new public REITs. 'Governments should do what they're best at, like investing in the economy and building roads. The same is true of the big European multinationals like Daimler Chrysler.'
The wall of money that has been flooding European property markets will continue unabated, Van Ommen predicted. In the wake of the Anglo-American investors in Europe, he sees a new flow of funds coming from Japan. 'Japan has the largest pension fund in the world: it has $500 bn under management and zero exposure to real estate. Some people question whether the wall of money is a risk or an opportunity. I think it's the greatest opportunity we've ever seen.'