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RICS says not all investment funds are the same


25 Sep 2009

The proposed EU regulation on Alternative Investment Fund Managers is not taking into account the specific aspects that set property funds apart from other investment funds, says RICS, the mark of property professionalism worldwide, in a position paper addressed to the European Parliament today.

The Alternative Investment Fund Managers’ proposal is one of the European Commission’s responses to the global financial crisis based on tougher regulation and improved investor protection, which the European Parliament is currently reviewing.

Though in principle RICS welcomes the proposal to regulate managers who, directly or indirectly, manage alternative investment funds and the marketing of these funds to professional investors in the EU, the organisation is not happy with its apparent one-size-fits-all approach.

RICS is very concerned about the impact that the new Directive could possibly have on the real estate market, if property funds and the valuation of their assets receive the same treatment as other types of investment funds, such as hedge funds and private-equity funds.

According to RICS, the EU regulation needs to differentiate between valuing real estate and other types of assets. Therefore, and because of the specific aspects of property funds, the organisation suggests a possible split of the EU Directive.

In addition, RICS calls on MEPs to amend the Directive to include a clear definition of what an Alternative Investment Fund is, and proposes that provisions for third country funds apply at the same time as those for EU-based funds to avoid unjustified restrictions to non-EU managers willing to market their funds within the EU territory.

Sander Scheurwater, RICS Head of EU Policy & Public Affairs said:

“We fully understand that the causes of the current economic crisis need to be tackled and that there is some degree of urgency behind it. However, as real estate funds did not cause the current crisis, and as these funds and the valuation of their assets differ from other types of Alternative Investment Funds, we believe the impact of this proposal on real estate funds should be more carefully examined.

We support the principle of a Pan-European passport for marketing real estate funds. However, it is not possible to treat them in the same way as for example hedge funds and private equity funds, for which this proposal was originally intended.

RICS will support the European Institutions in further investigating what would be the best approach for real estate funds and the valuation of real estate.”