FRANCE – The French government is developing a new class of UCITS, which could have a positive impact on the country’s real estate market and solve its retirement problem – according to SGAM Alternative Investments.
Organisme de Placement Collectif en Immobilier or OPCI will see direct investment in real estate assets - similar to German open-ended real estate funds.
“We believe those new real estate funds will have a positive impact on the French real estate market by securing new long-term domestic investors thus lowering the impact of foreign capital outflows in case of a real estate crisis,” said Quoc Giao Tran, global head of real estate, at the Societe Generale arm.
“The idea is to provide investors with a direct and liquid access to real estate returns (inflation linked returns with little risk),” said Tran.
Speaking at a seminar on alternative investments in Paris recently, Tran said the development “will possibly solve France’s problem of retirement”.
“I would rather like to buy in France for French people,” he added.
SGAM reckons the current low interest rates mean that real estate returns linked to inflation provide a good alternative to bonds. It adds they are the ideal product for pensioners and future pensioners to secure their holdings and to protect their capital from inflation.
The French government is currently working on the OPCI project, which may be voted on by the end of the year. Possible regulation changes and amendments mean that the product could be marketed by the summer of 2006.
For retail investors, OPCI will be distributed by large retail banks and big insurance companies, said Tran.
Institutional investors would enjoy higher returns and access to an existing diversified real estate portfolio.