04 Nov 16 | News

Luxembourg Innovation: LISER and Startup Beta Tracker SA sign a Public-Private Partnership in residential real estate sector

The innovative scientific model developed by LISER will evaluate risks of mortgage loans with the aim to protect both banks and consumers

LUXEMBOURG  3 November 2016 – LISER has signed a PPP with Luxembourg startup Beta Tracker SA to create an innovative tool that will enable the real-time evaluation of risks linked to mortgage loans.  The development of this tool, named b-Tracker, responds to requirements of the European Directive 2014/17/UE, soon implemented in Luxembourg, which require banks to strengthen their analysis of property risks.

The Luxembourg company Beta Tracker SA, founded by a dynamic duo who identified the need for a scientific risk assessment model related to real estate risks, will bring its expertise in the fields of banking, auditing and consulting. LISER will be in charge of developing statistical and econometric tools to develop scientific assessment models of real estate assets and their related risks.

New requirements for banks from 2017

The subprime loans crisis that affected European economies after 2007 showed that failures in the real estate market could have major consequences at the macroeconomic level. In response, European regulation has been strengthened requiring banks to analyse and greater manage exposure to real estate risks. In this context, the law under preparation to transpose Directive 2014/17/EU on credit agreements for consumers, currently under review in the Luxembourg Chamber of Deputies, will impose valuation rules on banks for residential real estate mortgages.

A project developed in Luxembourg to strengthen risk analysis related to real estate sector

The scientific model developed by LISER as part of its PPP with Beta Tracker SA will enable banks to better analyse their exposure to real estate risks and also provide consumers with the reassurance that they acquired their housing at the market price.

Progressively innovative products

Following the launch of their PPP, LISER and Beta Tracker SA will firstly begin to develop a ‘static model' whose commercialisation is planned for July 2017. This model will provide a scientifically robust assessment of the value of a dwelling based on distinctive details such as its intrinsic characteristics (floor area, number of bedrooms, energy performance, etc.), location, neighbourhood (proximity to green spaces, access to shops, public transport access, etc.) and finally, temporal variables (level of interest rates, etc.).

Secondly, the complex 'dynamic model' will be developed in 2017-2018 and will allow banks to assess their exposure to risks related to real estate such as rising interest rates and deteriorating economic or regulatory changes.

Complementary skills

LISER, a public research institute in social sciences, will bring its expertise to the b-Tracker project. This will include its mastery in the field of housing economics and its multidisciplinary team of experts in statistical and econometric tools required for the development of valuation models for real estate assets and their associated risks.

Founders of Beta Tracker SA, Mr. Daniel Haag and Mr. Laurent Muller will bring their expertise and experience in the fields of banking, auditing and consulting.