GLOBAL - Global real estate performed well last year, according to IPD figures published, delivering returns only slightly down on their 2005 peak.
IPD figures for 20 global markets, based on a €964bn sample, showed local currency returns of 14.9% in 2006, compared with 15.1% the previous year. However, an average 8.8% increase in capital values pushed down income returns to 5.7%.
European real estate, meanwhile, underperformed the IPD global index, returning 13.3% as IPD claimed US market strength further diluted earlier German market weakness in the global index.
That said, US returns has also received a boost from dollar depreciation as the US, in dollar terms, returned 22% in 2006 compared with 5.7% the previous year, contrasted with euro returns of 9.3% and sterling returns of 7.3%.
This set of results is likely to be the last in a three-year run of global high returns, according to as co-founding director Ian Cullen said 2006 "probably represents the last of the current sequence of double digit results" from mature markets.
Markets measured by Investment Property Data (IPD) are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Portugal, South Africa, Spain, Sweden, Switzerland, the UK and the US.
In a separate development, IPD has announced it is to freeze historical constituent portfolios and index values in its quarterly index. Previously, index histories changed each time additional property portfolio information came in but, from December, reports on historical returns will be fixed.
IPD director of indices Gareth Parker said the change was the result of better information.
"The index has now reached such quality that it will make for equally accurate analysis," he said.
He added making derivatives trades easier would be "a good side effect" of the move. "Derivatives have a great future ahead of them," he said.