REAL ESTATE – Belgian pension funds’ real estate holdings returned 22.9% in 2005, according to Mercer Human Resource Consulting.

“In contrast to the nineties when real estate investments performed poorly, in 2005 they achieved an excellent result for the fifth consecutive year, with returns of +22.9%,” the consulting firm said.

The benchmark, the Brussels Stock Exchange Real Estate Index, came in at 20.6%. “In real estate pension funds outperform the index due to the predominance of European real estate,” Mercer said.

“However, real estate only represents 3.2% of the total pension fund assets covered by the survey.” That’s up from 2.9% at the start of 2005.

Mercer has analysed 100 active funds, which represent two-thirds of the 150 active funds in Belgium. That’s 136 investment portfolios with total assets of €6.2bn.

"Taking into account the investments in real estate as well as liquid assets, the European region pulls in no less than 70% of Belgian pension fund investments," said Mercer partner Willy Santermans.

Overall, Belgian pension funds delivered median returns of 16.8% in 2005 - almost double 2004's 8.6%. Equities returned 27.9%.

"The strong results in 2005 are largely due to the fact that Belgian pension funds continued to invest in their traditional asset classes," added Santermans.

"Following the stock market slump that started in March 2000 and lasted approximately three years, they maintained nearly half their assets in equities."