German real estate returns are at their highest level ever, according to MSCI.
The firm’s annual IPD German Annual Property Index returned 6% last year, up from 5.2% in 2013.
The return, the highest recorded since 1996, saw all market sectors perform above five, 10 and 15-year averages.
Total returns on industrial (12.2%), residential (7.9%) and retail (7.2%) all outperformed the index. Only office properties underperformed, at 4.2%.
The index, which measures ungeared total returns to directly held standing property investments, tracks the performance of 2,235 property investments with a €52.1bn total capital value.
MSCI also released its IPD Nordic Annual Property Index, with all properties across the Nordic region returning 7%, compared with 5.6% in 2013. The index tracks the performance of 6,454 property investments, with a total €98bn capital value.
Property in Norway led the way, returning 8.2% across all properties, followed by Sweden on 8.1%. Finland (5.6%) and Denmark (4.5%) lagged in comparison.
Christina Gustafsson, MSCI executive director, said capital growth was mainly a result of increasing values in Oslo offices.
In Sweden, the best performing sector was office, while returns on retail remained low, she said.
”Most Swedish segments have experienced value increases and strong total returns,” Gustatsson said.
“Denmark is a market of two sides, where residential is very strong, but the office market, particularly in the outskirts of Copenhagen is weak, largely because of high vacancy rates.”
In Finland, the residential sector was the best performing sector for the seventh consecutive year.
MSCI said that total returns in Italy improved year-on-year, driven by income rather than capital growth. Total returns last year were 3.6%, an improvement on the 2.3% recorded in 2013.