Aspects Regarding the Interdependence between Capital Market and Real Estate Market

International Conference Science and Technology in the Context of Sustainable Development Organized on the Occasion of the 60th Anniversary of Petroleum , Gas University of Ploieşti, 2008

8 Pages Posted: 7 Nov 2010 Last revised: 8 Nov 2010

Mirela Matei

affiliation not provided to SSRN

Ioan Done

affiliation not provided to SSRN

Jean Andrei

Petroleum and Gas University of Ploiesti

Date Written: November 7, 2008

Abstract

Real estate field is in a steady development in Romania, like in others countries from Central and Eastern Europe. The determinant facts are development of banking sector and capital market, setting up of specialized actors, the interest of foreign investors, the increase in purchase power of the population. The banks` offer has had diversified and "exotic" currencies are now available for mortgage credits. An impulse for the development of mortgage credits is the establishment of legal framework: the law of mortgage bonds and the law of mortgage banks. Romanian real estate companies are in a start-up stage, but there are many development possibilities. In this order, we can use the experience of others countries from America and Europe. The innovative process in capital markets offers many instruments for speculation and hedging strategies. For example, in USA and West Europe, the main stock and commodities exchanges have launched futures and options contracts on real estate indexes like CREX or Standard&Poor`s/Case Schiller. Now, Romanian investors have few opportunities, but the development of real estate products will offer many possibilities. In this order, public and private initiative will contribute to the development of real estate market in Romania, like in others countries from Central and Eastern Europe. For example, in Bulgaria, real estate investment trusts (REITs) are set up in 2003 and they use the funds to make investments only in real estate fields. The major part of their profits (around 90%) are used to paid dividends to shareholders. So, the shares of REITs are instruments to invest in real estate fields without purchasing properties. For this reason, institutional and even individual investors use these instruments.

Keywords: real estate, exchanges, REITs, securitization

JEL Classification: C44, D81

Suggested Citation

Matei, Mirela and Done, Ioan and Andrei, Jean, Aspects Regarding the Interdependence between Capital Market and Real Estate Market (November 7, 2008). International Conference Science and Technology in the Context of Sustainable Development Organized on the Occasion of the 60th Anniversary of Petroleum , Gas University of Ploieşti, 2008. Available at SSRN: https://ssrn.com/abstract=1702984

Mirela Matei

affiliation not provided to SSRN ( email )

Ioan Done (Contact Author)

affiliation not provided to SSRN ( email )

Jean Andrei

Petroleum and Gas University of Ploiesti ( email )

B-dul Bucuresti, No. 39
Ploiesti
Romania

HOME PAGE: http://www.upg-ploiesti.ro/

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