Europe’s top performing real estate markets saw their returns trimmed last year, according to MSCI.
Ireland’s total return fell to 25% from 40% in 2014, while the UK – which in 2014 achieved the highest return with 17.8% – dropped to fourth highest with 13.1%.
Colm Lauder, vice-president at MSCI, said: “The slowdown in two of the keenest markets of 2014, Ireland and the UK, reflects a further stabilisation in the pace of capital value growth in both markets, leading to a moderation in total returns.
“[However], both of these markets remained among the top performing in the index, showing that commercial investors remained firmly interested in Irish and British property investment.”
MSCI’s IPD Pan-Europe Annual Property Index tracked the performance of 49,578 properties in 919 funds, with a combined €731.4bn in capital value.
It recorded a 10% total return in pan-European property last year, slightly up on the 9.4% recorded in 2014.
Total returns in the Spanish property market, which MSCI said had a history of volatility and been slow to recover in the current cycle, rose to its highest level since 2006.
Sweden experienced the largest growth in total return last year as it jumped to 14.1% from 8% in 2014.
Total return also jumped significantly in Portugal, rising to 12.1%.
MSCI said total returns in Hungary and the Czech Republic also rose markedly.
Italy, the weakest performing market in this year’s index, returned 4.2%, up from 3.5% in 2014, as capital values continued to decline, albeit marginally at -0.9%.
Overall, total return in all the Nordic countries increased.
Lauder said growth across Continental Europe, particularly France and Spain, signalled that, “at least to some degree, investors are branching out to take advantage and tap into new opportunities in these still-recovering markets”.
