Direct and indirect investment by life insurers in real estate is hardly newsworthy, but the European oversight body, as part of its longstanding review of the S2 regime has ear-marked the capital charges associated with real estate investing for extra scrutiny - and the word on the street is that charges for both REIT's and unlisted vehicles could be relaxed.

One of the dilemmas which insurers face when considering real estate investments of all categories concerns selecting an appropriate vehicle in which to invest: REIT, UCITS/OEIC fund or private and direct investing.  To date, capital charges for unlisted, direct investments have been at a premium to their listed counterparts and this has in part been responsible for a wave of recruitment in structuring, credit, securitisation and other specialist personnel to the investment offices of life companies and their managers in recent years.  Recent lobbying by trade associations representing both listed and unlisted real estate organisations suggests that the goal posts could be about to be moved...