Property hedgers seek derivative foundations

The latest attempt to develop property derivatives could facilitate hedging and widen indirect exposure to the market

Two groups are trying to establish a property derivatives market in the UK. Their aim is to create a hedging tool to protect investors against a crash in the market. The sector was given a boost in last week's Budget, with the Chancellor announcing that property derivatives will be liable for capital gains tax in the same way as equity derivatives, as both generate capital gains and losses. Property is one of the last major asset classes without a liquid derivatives market, either in the US or in Europe. The Property Derivatives Working Group (PDWG), consisting of a mix of banks, lawye...