German non-listed vehicles record ten-year high

INREV’s German Vehicles Annual Index 2018 recorded a ten-year high for non-listed real estate performance in Germany, with total returns of 4.29% over 2017, up from 2.68% the previous year.

The results were largely due to a very strong performance in the first half of the year, driven especially by income returns of 4.34% over the year, which were the highest on record and significantly ahead of capital growth at 0.01%.

Spezialfonds continued to outperform Publikumsfonds, in line with the upward trend of the past seven years since 2011. This year, the gap has widened considerably between the two vehicle types with Spezialfonds delivering their highest returns since 2001 at 7.76%, well ahead of the 2.55% recorded for Publikumsfonds.

Value added vehicles also enjoyed a remarkable surge. They shook off previously sluggish performances in 2015 and 2016 of -1.79% and -3.81% respectively, accelerating to 9.08% – the best performance since 2006 and substantially outpacing core vehicles, which reached 4.25%.

Vehicles targeting Germany only, produced healthy double-digit returns of 10.20%, up from 7.23% for the previous year. Some way behind, but still robust, vehicles with a European strategy also improved on previous years, reaching 4.46%; while those with a Global strategy posted returns of 3.28% in 2017.

Residential remains the best performing sector for the third year running, reaching its highest performance on record with a total of 9.92%. Despite this remarkable result, the gap to other sectors was much narrower in 2017 than it was in 2016. Retail, the next best performer, was only 1.2% behind residential with total returns of 8.71% – notably higher than the previous year’s achievement of 4.96%.

All other sectors also witnessed improvements, with industrial/logistics vehicles hitting a convincing 7.10%; and the office sector shifted back up from 1.37% in 2016 to 3.58% in 2017.

Henri Vuong, INREV’s Director of Research and Market Information, commented on the findings: ‘‘These results show investment in German non-listed real estate vehicles returning very strongly with the best performance since 2007. It’s a compelling story that puts Germany some way ahead of the European region as a whole. Interestingly, the double-digit returns for vehicles targeting Germany only show that German domestic investors are being rewarded for their loyalty.’