Total returns for all non-listed property funds dropped from 0.3 per cent to -0.6 per cent driven by decreased performance of continental Europe funds, according to the INREV Q4 2012 Quarterly Index.
Capital growth remains negative for the sixth quarter in a row as it drops from -0.3 per cent to -1.8 per cent in Q4 2012.
Continental Europe fund performance decreased from 0.4 per cent to -1.0 per cent, mainly because of the drop in performance of multi-country funds from 0.4 per cent to -2.2 per cent during the quarter.
Core funds continue to outperform value added funds as the case has been since the beginning of 2011. In Q4 2012, core funds performed -0.2 per cent compared to -2.5 per cent for value added funds.
For single country funds, Finland, the Netherlands and the UK show positive performance in Q4 2012 but France, Germany and Italy recorded negative results.
Casper Hesp, director research and market information, INREV says: “The positive momentum of the previous quarter did not last into Q4 2012 as total returns for all funds dropped significantly.
“The drop in growth can be related to the negative performance of value added funds. In general these funds have higher gearing ratios compared to core funds. Funds with a gearing ratio between 0-40 per cent clearly outperformed funds with a gearing ratio between 60-100 per cent at 0.2 per cent and -7.9 per cent respectively.
“However, according to our recent Investment Intentions Survey, investors are likely to take more risk and switch allocations to value added funds in 2013 so it will be interesting to see if this changes performance in 2013.”