Barclays Capital and Eurohypo are pitching swaps between different property market sectors to investors. Officials say the swaps would likely be linked to sectors of the Investment Property Databank index, such as commercial or residential. The U.K. property market has seen around 10 deals referenced to the IPD's monthly index since January, according to estimates by officials.
Ed Stacey, managing director at Eurohypo in London, said an investor would typically pay a spread over LIBOR and receive the returns of the commercial or residential index. Stacey suggested total-return swaps, in which an investor paid residential property and received commercial, for example, may also be possible, but noted Eurohypo has not yet priced such a deal.
