INREV returns at nearly 10% - German index launched

European non-listed real estate funds last year delivered their best performance since 2006, according to the latest Annual Index from INREV, the European association for non-listed vehicles. The Index recorded a 9.7% return, the highest since before the financial crisis, and up from 8% in 2014.

Overall returns were boosted by the performance of value-added funds, which rose to 14.2%, while core funds also registered an improved return of 9%. Closed-end (10.7%) funds slightly outperformed open-ended funds (9.3%).

Henri Vuong, INREV’s director of research and market information, said European non-listed real estate had recovered well following the financial crisis.

“Our latest index shows the industry is in good health,” she said: “It’s particularly encouraging to see positive returns weren’t limited to just the biggest markets – in fact, all the fund types we tracked were in the plus column last year.”

INREV said the UK topped the performance list of country-specific funds, although the overall return was down to 12% from 16.7% in 2014.

“There has been a lot of speculation recently about where we are in the cycle,” Vuong said. “Although the overall return for 2015 was the highest in nine years, the 2006 peak was closer to double this figure. We are unlikely to see a similar high point in the medium term, suggesting lessons have been learned and the industry’s long-term trajectory is more sustainable.”

In second place were Dutch funds, which climbed into second place following a significant improvement from the 3.4% recorded last year to 9.6%. Next were French funds in third place with 8.8%, while German funds were fourth with 7.4%.

Among other improving funds were Finnish (up from -1.1% in 2014 to 7.2% in 2015), Nordic (from 3.9% to 10.6%), Southern European (from -1.1% to 6%) and Italian funds (from -5.2% to 2.2%).

Single-sector strategies also posted good returns, said INREV. The best sector was industrial and logistics at 15.9%, followed by office (10.1%), retail (10%) and residential (9.7%).

The INREV Annual Index, launched in 2004, measures non-listed real estate fund performance based on annual net asset values. The Amsterdam-based INREV, is a non-profit organisation which aims to create a forum for the sector and increase the transparency and accessibility of non-listed vehicles. It has 384 members, including institutional investors, fund managers, banks and advisory companies.

Separately, INREV has now launched its new indices for German non-listed real estate vehicles, which it developed in collaboration with the BVI, the German Investment Funds association. The key proviso for inclusion is that the vehicles must be domiciled in Germany.

The first release of the All German Vehicles Annual Index includes coverage of 177 vehicles domiciled in Germany representing aggregate NAV of almost €100 billion, with historical performance from 2001 to 2015.  The Index can be broken down into Publikumsfonds and Spezialfonds sub-indices.

The quarterly index includes 20 vehicles at Q2 2000 increasing to 175 vehicles at Q1 2016, representing NAV of €25.4 billion and €99.4 billion respectively.