ASIA - Non-listed real estate in Asia returned nearly 10% last year, despite double-digit losses suffered by institutional investors exposed to the Japanese market, according to the Asian Association for Investors in non-listed real estate vehicles (ANREV).

ANREV's index, covering 50 funds in the region, saw a return to positive territory after a steep decline of 15.9% across the entire sector in 2009.

Chris Reilly, director of Asian property at Henderson Global Investors and chairman of the association's performance measurement committee, said the index served as a "first step" toward providing investors with a reliable and meaningful measurement tool.

"The index was an important initiative highlighted as a priority by ANREV investor members," he said.

"They know investment capital can more easily flow to sectors where performance can be better evaluated and understood."

Despite the positive overall increases of 9.8%, losses in the Japanese market of nearly 18% continued to "drag" on returns, ANREV said.

It estimated that the 55% of assets not held in Japan returned around 17.6% over the last year, with Singapore and China accounting for around 15% and 13% of all holdings, respectively.

Examining the Japanese market more closely, ANREV said: "The main driver of underperformance in the Japan market has been the negative impact of leverage in a falling market. The five-year average leverage level in the Japanese market is 73% compared with 44% in the rest of the region."

The index, first launched in 2006, measures annual net asset value-based performance, allowing investors to assess returns while taking into account the impact of fees.

Reilly stressed that it was a priority to grow the index in future, in order to guarantee it was as representative of the market as possible.

ANREV members currently include nearly 140 companies in 14 countries.