By Philip Charls, CEO, EPRA

We have seen tremendous growth in the REIT industry around the globe in the last few years, most particularly in Europe. Listed real estate is now well known as an asset class, and many countries are adopting REITs as a tax transparent investment vehicle.

The first REIT was introduced in the United States in 1960, but it was not until the 1990s that the U.S. REIT industry gained momentum. Likewise, the first European REIT legislation was passed in 1969 in the Netherlands, but it was not until this decade that the industry finally took off.

The introduction of the French SIIC in December 2003 proved the catalyst for subsequent developments in Europe, and the majority of legislative initiatives have taken place in the later part of the decade. Most notably, the two largest economies in Europe, Germany and the U.K., finally introduced their versions of the REIT approach 2007.

However, there is still room for improvement within the European REIT landscape. For example, the French SIIC is in its fourth version of legislation, and there is sure to be more enhancements to other European REIT legislation as time goes on.

Additionally, there is still potential for the European REIT industry to expand, with several countries poised to pass real estate investment legislation. In fact, the global (ex-Europe) proportion of underlying real estate in a listed format (either a REIT or a real estate operating company) is just over 11 percent. Applying this weighted average ratio to the European market, it could grow by more than $300 billion, or by 75 percent of its current figure, with the largest growth potential in the German and Italian markets.

Currently, there are approximately 25 individual countries with REIT legislation dotted around the world, with the total size of the global commercial real estate market estimated to be $17.3 trillion. Globally, there are estimated to be 500 REIT-like companies, with more to come.

The European Public Real Estate Association’s (EPRA) mission is the promotion, development and representation of European listed real estate, and we view the broad adoption of REIT approaches in Europe a major step.