International derivatives exchange Eurex has announced plans to launch Europe's first property futures on 9 February 2009. The futures will be annual contracts based on the total returns of Investment Property Databank's IPD UK Annual All Property Index for individual calendar years. Eurex and IPD signed a license agreement in October 2008.
International derivatives exchange Eurex has announced plans to launch Europe's first property futures on 9 February 2009. The futures will be annual contracts based on the total returns of Investment Property Databank's IPD UK Annual All Property Index for individual calendar years. Eurex and IPD signed a license agreement in October 2008.
Peter Reitz, member of the Eurex executive board, said: 'Contracts on real estate mark the addition of an exciting new asset class to our existing product suite. Especially in the current market conditions, exchange-listed, centrally cleared real estate futures bring added value to the market.'
'Risk management is a key issue and futures are an excellent risk management tool enabling hedging and bringing additional liquidity. They will allow open ended property fund managers greater flexibility with cash flow management and redemptions, unavailable in other property investment instruments. In addition, the central counterparty clearing of Eurex Clearing will mitigate counterparty risk effectively,' he added.
The company said additional futures based on Investment Property Databank's property indices, such as UK sector indices (Offices, Retail, Industrial) and other European indexes, initially France and Germany, are also intended for launch later in 2009.
