INREV launched its first European index for unlisted real estate fund performance at its conference in Budapest last month, with the index showing that funds investing in UK property were the most successful in 2004.
UK funds produced an average total return in 2004 of 19.7%, ahead of Portugal with 12.6%. Industrials proved the best sector, with 2004 total returns of 16.9% across the whole of Europe, followed by retail with 11.25%.
The ‘all funds’ total return was 8.6%, higher than the 6.3% recorded in 2003, but below the peak of 10.4% in 2002. However, the overall performance was dragged down by poorly-performing vehicles for retail investors (mainly German open-ended funds). Excluding vehicles for retail investors, the average total return in 2004 was 15.4%.
The index, calculated by Investment Property Databank (IPD), collates performance from 87 funds across seven countries with gross assets of e72bn. The index is heavily weighted towards UK funds as it includes the whole of the Association of Property Unit Trusts index, a long-established index of 37 UK funds, with net assets of e21.7bn. The index also includes seven German open-ended funds which invest on a pan-European basis and which have net assets of e25bn.
The index will remain unfrozen in order that more funds can be added. The index will initially be updated annually (past results for 2001-2003 were published earlier this year) but it is intended that index results be published quarterly.
Philip Rose, of Alpha Real Capital, co-chairman of INREV’s benchmarking and performance measurement committee, says: “The launch of the INREV index marks a significant step forward for the industry. The increasing demand from investors around the world for non-listed real estate vehicles has been matched by their growing sophistication.
“As a result, the requirement to develop more effective benchmarking tools, along with greater transparency and liquidity has been a key