UNECE Forum: rethinking the real estate markets Rome

If well regulated and transparent, the real estate sector could be a driving force for development, producing social, economic and environmental benefits for UNECE member States. The sector could in fact steer economic recovery towards more sustainable economic systems and healthier production and consumption behaviors.

The current global financial crisis is in large measure the result of inadequate regulation of real estate and financial markets. Because mortgage lending was not properly supervised, the financial markets were allowed to develop complex financial instruments that few people understood, credit risk was misjudged and misinterpreted, and credit rating agencies failed to carry out their fundamental role. In consequence, investors did not properly understand what they were buying, speculative bubbles were generated and millions of families who ill-advisedly took mortgage loans now risk foreclosure.

Real estate and property markets underpin every industrialized economy. Because the financial crisis was triggered by a sub-prime mortgage bubble in the United States that spread across borders, the real estate sector requires special attention. Addressing urgent institutional challenges could shorten the recovery time and establish frameworks leading to more sustainable economic systems.

UNECE discussed the root causes of the crisis in the United States as well as its impacts in the rest of the world during the seminar, “Financial and real estate crises”, (New York, 16 December 2008). The seminar concluded that there was a need for institutional reforms to reduce incidences of real estate bubbles and prevent similar problems in the future (see www.unece.org/press/pr2008/08env_p19e.htm).

A special forum will be held in Rome on 3 and 4 June 2009 on the topic, “Rethinking the real estate markets”. The forum is being organized by UNECE and its Real Estate Market Advisory Group (REM) with the support of Tecnoborsa (the organization for the Development and Regulation of the Real Estate Economy of the Italian Chambers of Commerce) and will be open to government and civil society representatives. Interactive sessions and presentations will contribute to the development of the “Real Estate Market Advisory Checklist”, a series of principles and guidelines for a sound restructuring of the real estate sector.

“The forum’s logo was inspired by the Chinese ying and yang, which symbolize the search for balance. The purpose of the discussions in Rome, and of the checklist, will be to provide government authorities, decision makers, managers and real estate operators with a tool to identify the principal steps needed for new regulations that will improve the sustainability of our economies”, said Mr. Giampiero Bambagioni, current Chair of REM.

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Ref: ECE/ENV/09/P08