The European Public Real Estate Association (EPRA) wants Solvency II to be adjusted so that insurers are not as held back when it comes to real estate investments.

“One of the biggest obstacles to European insurers investing in listed real estate companies is the heavy capital weightings imposed by Solvency II,” said EPRA chief executive Dominique Moerenhout, as quoted by the Financial Times.

According to the report, the industry body is pushing for the capital weighting on listed property investments to be cut from 39% to 25%. If Solvency II is relaxed, EPRA claims the index tracking Europe’s largest listed property companies will have a combined market capitalisation of €500 billion instead of the current €247 billion.

Similarly, the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) is calling for changes. The report said it is pushing for the capital weighting for non-listed real estate assets to be lowered from 25% to a “more appropriate” 15% – even less if the UK were not included.

Earlier this year INREV said the current 25% solvency capital requirement for European real estate “clearly misrepresents the picture across Europe – especially given that the UK market shock in 2007-8 currently constitutes the only statistical basis for the level of that requirement."


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