European funds outperformed their North American counterparts for first time since late 2009, according to IPD.

The Investment Property Databank said Europe had the UK’s recovery to thank for its return to form.

The 5,884 assets included in the IPD Global Quarterly Property Fund Index produced a direct asset level total return of 2.7% for the final quarter of last year.

The UK alone returned 4.3%, which, combined with Europe’s 1.6%, gave the Continent an overall return of 3.2%, above both the global average of 2.7% and North America’s 2.7% return.

Peter Hobbs, managing director and head of research at IPD, said: “European fund-level returns exceeded those in North America and Asia Pacific, ending North America’s dominance.

“This is almost solely led by the improvement in the UK market.

“That said, Europe has started to gain attention from investors, particularly North American investors, eager to take advantage of discounted pricing and an improving economic outlook.” 

At fund level, the IPD results improved in the fourth quarter of 2013 with a return of 2.9%.

This left the full year 2013 return at 10.7%.

IPD said the standout sector remained industrial, which outperformed both on a quarter-on-quarter basis and a year-on-year basis.

Residential continued to lag commercial real estate over the last 12 months but still outperformed all other sectors on a five-year basis.