The international derivatives exchange Eurex revealed today a launch date of 9 February for Europe’s first property futures.
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.’
Eurex aims to work with major participants of the property derivatives market. With a notional contract size of £50,000 and daily valuation, Eurex intends to encourage additional market participants into property derivatives and help increase liquidity and transparency into this growing derivatives asset class.
Additional futures based UK sector indices - offices, retail and industrial - and other European indices - initially France and Germany - are also intended for launch later in 2009.