INREV begins work on €150bn asset-level real estate index

European real estate investment association INREV has begun work on an index that will track the performance of €150bn of real estate assets.

The organisation said it had received financial commitments for the endeavour from 28 of its members, which are typically major pension funds, insurers and investment managers.

INREV, which was set up by European institutional investors to increase transparency in the unlisted real estate asset class, has to date only created fund-level indices. An asset-level index would take it into the territory of organisations like MSCI which acquired property index provider IPD several years ago.

INREV said it was responding to demand from its members, which requested the creation of an asset-level data in 2015.

Matthias Pilz, head of special projects at Allianz, said: “INREV’s Asset Level Index initiative is a key step for the real estate industry to create transparency, enabling investors to understand the drivers behind the performance of their investments.”

Nick Blakemore, director of portfolio analysis at M&G Real Estate and chair of the asset-level index focus group, said: “28 signed commitments from across Europe shows what a huge appetite the industry has for robust asset-level analysis.”

Speaking at last year’s annual INREV conference in Vienna, research director Henri Vuong said the development of asset-level performance indices was a “natural step” for the organisation.

Responding to today’s announcement, Vuong said: “The Asset Level Index fills a major gap highlighted by the industry. It also delivers on INREV’s strategic objective to provide market information that supports peer-to-peer comparison.”

The association will begin building a €150bn pan-European prototype and hopes to launch something – on which it will consult – in 2019.

Blakemore said: “With 7,000 assets already, I expect the scale of the founding index will only increase over time providing an even greater wealth of performance data.” 

INREV said the initiative had the potential to become global. The association already works with its US and Asian counterparts NCREIF and ANREV on fund-level indices.