Romania must set in place various financial instruments to attract and mobilize investments, given that it can no longer rely on European funds alone, and convergence funding will probably no longer exist, Mihai Precup, Secretary of State with the Prime Minister’s Chancellery and president of the Interministerial Council for State Aid Policy told a specialist conference.

He cited the example of real estate investment trusts (REITs), which represent a specific legal form for public companies that own real estate assets and almost entirely distribute to their shareholders the income derived from the exploitation of these assets, in the form of dividends, being governed by a clear legislative framework.

The bill on real estate investment companies has cleared the Senate and is now under debate in the Chamber of Deputies.

Precup emphasized that such legislation is very important for the capital market investors, as the construction sector generates over 8% of Romania’s GDP.

„We need new opportunities and, as it turned out, the presence of a REIT in the capital market will encourage more investors or more real estate players to get there. On the other hand, it brings governance and transparency, which in a non-listed company is more difficult to monitor. In the capital market there is the guardianship of the Stock Exchange. (…) I strongly believe that a government must look to create wealth and then distribute it,” the official on Tuesday told a conference that touched on the real estate investment trust (REIT) as an instrument that connects the real estate market in Romania with the development potential through the capital market, organized by BVB and Meta Estate.

According to him, even if REITs enjoy certain tax advantages, they come with a consolidated legislative package that protects both retail investors and the REIT owner, its management.

„By developing this sector, you generate wealth for the government to further channel it to the people. As I said, the capital market does not lack money. What we need is more financial instruments. We need a sophistication of financial instruments because we seek OECD membership. You know very well that in the coming years, Romania will probably exceed the average GDP per capita across the EU. We must come up with other financial instruments to attract and mobilize investments. We cannot rely on European funding alone, or on convergence funds that will no longer be available from a certain moment on. We must come up with more sophisticated financial instruments to mobilize capital,” the Secretary of State added.

He emphasized that the combined majority of OECD countries generate more than 80% of the world GDP.

„We need to get closer to these countries. We want to be a developed country, we need a more mature capital market, with more sophisticated financial instruments, because we cannot rely just on Fidelis bonds and on the purchase of stake in state-owned companies. We have to come up with other types of financial instruments,” he explained.

According to BVB representatives, REITs securitize real estate investments, offering investors the opportunity to own a share of a diversified real estate portfolio, while benefiting from the same fiscal and operational advantages as in the case of direct property ownership.

Currently, the relevant legislation is about to come out in a move that is expected to help investors and local companies unlock the necessary capital for real estate projects, stimulating both the real estate market and the economy overall, the cited source said.

AGERPRES