The Inrev Quarterly Index saw total returns decrease from 0.5 per cent (Q1 2012) to -0.3 per cent (Q2 2012), driven by decreased returns for multi-country funds which were down from 0.4 per cent (Q1 2012) to -1.1 per cent (Q2 2012).

Capital growth remains negative and decreased from -0.2 per cent (Q1 2012) to -1.0 per cent (Q2 2012).

Continental European returns are back in negative territory from 0.5 per cent (Q1 2012) to -0.4 per cent (Q2 2012).

For single country funds, Italy was the worst performing country in Q2 2012 with total returns of -0.4 per cent (though this was an uplift from -0.9 per cent in the previous quarter). Finland delivered the strongest total returns in Q2 2012 at 2.9 per cent although based on a small sample of seven funds.

Returns for UK funds dropped from 0.6 per cent (Q1 2012) to -0.2 per cent (Q2 2012).

Core fund continue to outperform value added funds with total returns of -0.1 per cent versus −1.3 per cent.

Casper Hesp, director research and market information at Inrev, says: "This quarter reflects the weakening sentiment in the wider economy with non-listed real estate funds tracking back into negative territory, having shown an uptick last quarter. What we’re seeing is probably what a lot of people might have anticipated as markets around Europe continue to be uncertain.

“The drill-down shows multi-country funds suffering largely on the back of investments in the southern European region. Highly geared-funds are struggling too. Unsurprisingly, core funds continue to demonstrate their relative strength (and attractiveness to investors) compared with value-add funds.

“This quarter’s index scores a notable first: it has been produced on an eight-week cycle as opposed to the previous 10-week cycle. This will be the norm for all future editions of the Inrev Quarterly Index, so providing investors with earlier insight into market movements.”