The BPF will today highlight the role of real estate in supporting the real economy, as Director of Finance Policy Ion Fletcher addresses delegates at EY’s ‘Capitalizing on Recovery: Building a Leading Business’ Real Estate Workshop.
Discussing the long term financing of the European economy and what this means for the CRE sector, he will cover topics including last year’s EU Green Paper on the subject, the effectiveness of government initiatives to promote long term investment and the importance of real estate to the economy.
His comments will include the following:
- The EU’s Green Paper is a good effort that raises a number of relevant issues and it is very welcome that policymakers are finally appreciating the impact of financial regulation on economic activity and are trying to do something about it. However, it missed a trick by including very few references to the relevance of real estate as a driver of the long term success of the European economy. The BPF is working with partner organisations in Europe to raise the profile and benefits of real estate among key EU policymakers.
- Regulation should be applied to real estate lenders consistently through the economic cycle. It should support and foster diversity in sources of CRE lending as well as insulating systematically important institutions from the vagaries of the CRE market. Any effective regulatory system needs to be proportionate and must take into account the implications for the real economy. In their rush to stabilise the regulatory system following the global financial crisis, policymakers have created a regulatory environment that arguably sacrifices economic growth for financial stability.
- Finding a way to facilitate SME access to capital markets would be a great leap forward in supporting the real economy. It is undeniably difficult, due to the lack of loan term standardisation and the fact that SMEs are rarely looking for enough capital to warrant the interest of institutional investors. However, we should explore the potential for some sort of aggregator entity (such as already exists in the UK’s social housing sector), which could allow businesses to pool their funding needs and carry out joint capital markets issuance.
Speaking ahead of the event, Ion said:
“Inevitably, the CRE sector faces challenges on the road to getting real estate into policymakers’ good books, but this needn’t deter the industry from continuing to highlight the importance of real estate to the real economy – both as a source of jobs and skills and as an enabler of wider economic activity. Indeed, commercial real estate is almost a hallmark of civilisation.”