EUROPE - Pan-European property funds maintained their revived levels of investment in 2011, with most of the new money directed at the UK, Germany and Central and Eastern Europe, data from IPD shows.

The IPD Pan European Funds index showed net investment of just over €1bn in each of 2011 and 2010, up from the €562m recorded for 2009, but still well below 2007 and 2008 when annual investment had reached nearly €4bn.

The value of assets in the funds within the index had continued to grow and now stood at €11.2bn, IPD said.

The figures reveal that the lion's share of net investments in 2011 was allocated to the UK, Germany and Central and Eastern Europe.

These locations accounted for €961m of the funds' total net investment that year of €1.2bn.

IPD said: "This pattern of investment by pan-European funds in large part reflected the perceived risk profiles of national markets in the context of ongoing euro-zone difficulties. 

"Germany emerged through 2011 as by far the strongest financial and economic power within the euro-zone, while the UK gained from its independent currency and the status of London as a safe haven in the eyes of many investors."

France saw lower investment demand, even though it was the country with the largest asset allocation to these funds, with around a third of the total value of €11.2bn.

Germany and the UK were the second and third most invested markets.

Direct property returns for the funds were 6.8% in 2011, down from 2010's 7%, but above the net asset value return of 4.1%, according to the index, which is based on a peer group of 16 open-ended funds.

This reflected the fact other assets held by the funds, including cash, had weighed on performance during the year, IPD said.

Meanwhile, Portuguese property funds returned 1.2% in 2011, according IPD.

Its new index - APFIPP/IPD Portugal Property Funds - showed that, within this, open-ended property funds made a positive return of 2.1% while closed-end funds posted a loss of 1.2%.

IPD attributed this disparity to the fact open-ended funds mostly focus on investment in income properties while their closed-end counterparts are generally more exposed to property developments.

The new index is based on a sample of 37 property funds with combined total assets under management of €7bn, it said.

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