Commercial property

Returns for non-listed European real estate funds positive in Q3, says INREV

Total returns for non-listed real estate vehicles were positive in Q3 2012, increasing from -0.3 per cent to 0.4 per cent, driven by improved returns for continental Europe, according to figures released by INREV.

Capital growth remains negative but increased from -1.1 per cent to -0.3 per cent.

Continental Europe shows positive returns, increasing from -0.3 per cent to 0.4 per cent, driven by an increase in returns for multi-country funds.

Core funds continue to outperform value added funds with total returns of 0.4 per cent versus 0.3 per cent. Value added funds show the first positive returns since Q3 2011.

For single country funds, Italy was the worst performing country in Q3 2012 with total returns of -0.6 per cent, a decrease from -0.4 per cent in Q2 2012. The Netherlands also showed a negative return (-0.1 per cent). Finland delivered the strongest total returns in Q3 2012 at 1.3 per cent although based on a small sample of seven funds. But this was still a decrease from 2.9 per cent in Q2 2012.

Total returns for closed-end funds increased from -0.7 per cent to 0.4 per cent and are in line with open-end funds returns for the first time since Q4 2010.

Casper Hesp, director research and market information, INREV says: “These results demonstrate a clear uplift in performance, suggesting that the non-listed real estate funds sector is tracking the generally more positive outlook in the wider economy across Europe. However, the market remains uncertain.

“The UK has underperformed the continental Europe index for the first time since Q1 2011 with multi-country funds driving the shift into positive territory for continental Europe.

“Overall, this is an interesting set of results from which the majority of investors will probably take comfort.”

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