Public affairs

Letter from Brussels

Solvency II charges for real estate in the spotlight again

How do you measure the downside volatility of real estate investments in the worst situation imaginable? How far could property values fall? Put simply, that’s the issue confronting regulators developing solvency capital requirements (SCRs) for property investments under Solvency II as far back as 2009 and 2010.

Reviewing historical data as property values rose and fell during economic and political cycles is theoretically the best approach but, for real estate investments across the EU, that poses a real challenge. Data available for real estate is