Launch of $400bn global property index reveals negative returns in Q1

Real estate fund associations ANREV, INREV and NCREIF have launched the first Global ODCE Index, bringing together three large regional indices for core property funds for the first time.

The index measures the performance of 50 unlisted, open-ended diversified core equity (ODCE) funds across the US, Europe and Asia-Pacific with a combined gross asset value (GAV) of US$403bn (€370bn).

More than half of the funds are located in the US, with the US ODCE index by far the largest and longest standing, covering 26 vehicles with US$341bn.

Its European and Asia-Pacific counterparts have been growing rapidly in recent years, with the former covering 16 funds with a total GAV of €44.7bn and the latter measuring eight funds and a GAV of US$22.9bn.

In its first consultation edition, the Global ODCE Index has recorded a total return of -1.9% for Q1 2023, with negative performance across all three global regions.

Asia-Pacific delivered the strongest performance at -0.43%, followed by Europe at -1.89% and the US at -3.38%.

On a five-year annualised basis, the Global ODCE Index shows an aggregated total return of 4.89%. The US outperformed the other two regions with a total return of 6.56%; Asia-Pacific posted 4.89% and the return for Europe was 3.26%.

The consultation release measures net-asset-value quarterly performance, net of fees and other costs, and the associations plan to eventually report gross-of-fees performance.

The index, which is a subset of the Global Real Estate Fund Index (GREFI), is being launched this week at the NCREIF Summer Conference in Chicago.

The associations said it will improve data provision and transparency in real estate funds globally, “helping to accelerate capital flows into the asset class”.

IPE Real Assets reported four years ago on how ANREV, INREV and NCREIF planned to create a global version of their ODCE indices, and how this could facilitate the creation of global open-ended core real estate funds.

The new index will run alongside GREFI, launched in 2014, and the Global IRR Index, which was launched in 2020 and covers closed-ended funds.

Dan Dierking, president of NCREIF, said: “The launch of the Global ODCE Index is a fitting tribute to the long history that ODCE funds have had in the US and highlights the evolution of global capital and our ability to adapt and advance the industry.

“We have done an excellent job on the regional ODCE indices, and now with INREV and ANREV we can provide a global outlook, giving investors increased insights into a clearly defined peer group for greater transparency.

“The index is one of the key tools that the three regional associations have to pursue our common ultimate goal, which is to help reinforce the message that real estate has earned the right to be considered as a mature and transparent asset class.”

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