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Proposal for a Directive of the European Parliament and of the Council on Alternative Investment Fund Managers


28 Sep 2009

1. Introduction
RICS (Royal Institution of Chartered Surveyors) is the leading organization of its kind in the world for professionals in property, land, construction and related environmental issues. We qualify members and guarantee standards all over the globe.

Over 100 000 RICS members, who are Chartered Surveyors, operate out of 146 countries, supported by an extensive network of regional offices located in every continent around the world. Our European Office is based in Brussels, and our European work is supported by several national groups.

Our members play a vital role throughout the entire property life cycle – from initial measurement, right through to investment in, and the use of, physical structures and other assets. We also provide impartial advice to governments, policymakers and Non Government Organisations.

Our Royal Charter requires RICS to act in the public interest when it comes to maintaining and promoting the usefulness of the profession.
RICS’ comments on the Commission proposal will contain some general remarks, followed by comments revolving around two specific aspects:

1. Property Funds

As the proposal aims to include all non-UCITS funds, it will include property funds. The only property fund-type mentioned in the proposal is the Open-Ended Real Estate Fund (OEREF). The Commission’s Impact Assessment1 also assesses Closed-Ended Real Estate Funds (CEREF)

2. Valuation

RICS has its own set of global Valuation Standards, the RICS Red Book2, which are regarded as the gold standard of property valuation practice by the top international investors, financial institutions and regulators the world over. RICS valuation standards are compliant with the International Valuation Standards (IVS). As valuation of property is an important aspect of the Commission proposal, RICS would like to emphasize the importance of valuation and the difference that exist between valuing real estate and other types of assets.

2. RICS’ general comments on the European Commission (EC) proposal

RICS welcomes the Commission’s intentions to create a European-wide market for non-UCITS funds, as this would enable property investment funds to invest and market their products in the entire EU.

RICS has been advocating the possibility of cross-border property investment and harmonization of legislation over the past few years, for example in the work it has done vis-à-vis the European institutions on Real Estate Investment Trusts (REITs)3 through own research and Open-Ended Real Estate Funds (OEREFs) through presence on the EC’s expert group4.

RICS however has strong reservations about the apparent one-size-fits-all approach the Commission is looking to adopt to all investment funds that are not UCITS, even if the EC’s Q&A accompanying the proposal states otherwise.
We believe that a proposal containing requirements originally intended for hedge funds and private equity funds cannot be transposed to deal with property funds without taking into account the specific aspects that set property funds apart from other investment funds (see next section).

To read the entire docuement, please click on the link below .