The French Senate this week approved a more benign capital gains tax regime for listed property firms, heralding the second stage of development for French Reits (real estate investment trusts), which is expected to significantly boost the number of property listings.
Under the new regime, property acquired through French property trusts, known as SIICs, will pay capital gains tax at a reduced rate of 16.5%, down from the usual rate of 34%, until 2007.
As a result of the reforms, analysts predict that the number of property firms listed on the stock exchange as a percentage of the whole could jump from the current 2% to nearer 5%, with the changes triggering a wave of initial public offerings.
According to reports, the first round of reforms to property trust legislation led to shares in property firms rising to trade on average 10% above the value of the property underlying the shares.
The new regime is expected to be in place by January, following a vote in the French National Assembly.
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