Listed property companies in Belgium, the Netherlands and France have significantly lower discounts to net asset value (NAV) compared to other European markets, a study by the European Public Real Estate Association has found.
This finding was unexpected, the study says. It points out: “These countries are the only ones in Europe to have, or to have announced the creation of a tax-transparent property investment vehicle.”
For Belgium and the Netherlands, the discounts to NAV were on average 25% lower than in the other countries, while in France the discounts averaged 20% lower than elsewhere. Even after additional tests, the study says “the beneficial effect of a tax-transparent property investment vehicle was still found”.
“This result appears to support the current call for the creation of a European-wide tax structure that allows real estate in public markets to be taxed in a similar way to direct property investment,” says the study authored jointly by James Sahun Bond of Cambridge University and Jim Shilling of the University Wisconsin-Madison.
The study examined a sample of 50 European property companies, taking into account company and country specific factors, as well as the effect of country specific variables. “Company risk is the most significant determinant of the discount,” according to the study, while company financial factors had only “a modest impact on the results”.
Having the European tax advantaged structure could facilitate a reduction in present levels of NAV discounts observed in a number of European countries, says the study: ‘An evaluation of property company discounts in Europe’. It was published recently as a research report by the EPRA Academic Circle, which produces fundamental research. Details: www.epra.com

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