Germany's ruling coalition has agreed new regulations for open-ended real estate funds, which have suffered from volatile investor behaviour, financial experts involved in talks told Reuters on Monday. From 2013, the cancellation period for investors will be 12 months and new investors will be subjected to a holding period of a minimum of two years, the sources said.
Up to now, there had been no regulation on holding and cancellation periods. Individual funds had set their own rules. The financial experts also agreed that under the new regulation, investors would only be allowed to withdraw 30,000 euros ($40,670) from the fund every six months. Foreign capital in a fund would not be allowed to exceed the 30 percent threshold, the sources added.
Open-ended property funds, from which investors are supposed to be able to withdraw money at any time, have proved popular among German savers, but a number of funds barred investor exits at the peak of Germany's banking sector crisis in autumn 2008 to avoid being forced into asset fire sales to meet the cash calls.
Earlier in January, German real estate fund Degi Europa, which is being liquidated by its owner, British group Aberdeen Asset Management, paid investors a first instalment of around 20 percent of the fund's total value.
Nine real estate funds in Germany are still frozen. Three, including those run by Aberdeen Immobilien, KanAm Group and Morgan Stanley, have announced their liquidation. In November, AXA Real Estate, part of French insurer AXA, said it would keep its 2.7 billion euro German property fund frozen for another year, in view of the ongoing liquidity crisis.