It is not so long ago that it was literally
headline news when a property derivatives
trade was done. Not so any longer.
Trades are
being done regularly and have been done on
both all property indices and sub-indices. It is
generally accepted that deals done in the first
quarter of 2006 surpass in value those done in
the whole of 2005. Regulated funds have
undergone, or are undergoing, their
internal approval processes. The
much-anticipated IPD index of
quarterly valued funds (total sample
value £58bn) is now with us. More
banks and brokers are active. The
IPD has adopted a policy of
publishing indices restricted in
accordance with a precise timetable,
in order to give certainty and support
to the market. Whilst some trading
activity is inter-bank, it would be
wrong to regard this as cosmetics: it
is a sign of a properly functioning
financial market that inter-bank
trading goes on, and offers
encouragement that pricing is kept in
line and that liquidity exists. The use
of tailored property derivatives in
structured finance situations is limited
only by the creativity and expertise of
their potential users and their
advisers. The tax rules provide a
considerable degree of predictability
for users, although, as they can be
amended by regulations, transactions
which provide an unanticipated tax
benefits may be counteracted during
the life.
See Property Derivatives Update from Berwin Leighton Paisner
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May 2006 |
