Europe is the weakest regional performer in IPD Global Quarterly Property Fund Index.

Europe is the weakest regional performer in IPD Global Quarterly Property Fund Index.

Globally, the 12-month return to September 2013 was 9.2% at the fund level and 9.1% at the direct property level (measured in local currency).

The fund level return was led by a strong 12.2% return in North America, while Europe dragged overall performance with a return of 4.3%. Asia Pacific returned 8.4%.

The September numbers confirmed the upturn in fund performance started in June 2013. From a high of 14.2% in March 2011, 12-month returns decelerated steadily to a low of 7.1% in March 2013, but performance has gathered pace in June (8% year-on-year) and September (9.2%).

The fund level trend has followed the asset performance pattern. However, it is the first time since June 2011 that fund level returns are in line with asset level returns. Until now performance had been too low to benefit from the leverage effect. Quarter-on-quarter, fund level performance surpassed asset performance in June 2013 (2.6% versus 2.5%) and September (2.8% versus 2.5%).

The spread between fund and direct level returns is not even across regions. In the US, leverage boosted a strong direct performance. However in Europe, fund quarterly returns are still lower than direct returns, due to a combination of relatively low asset level returns and high levels of debt and cash.

The IPD Global Quarterly Property Fund Index underperformed property equities at 14.6% (MSCI World Real Estate Index), and equities at 23.0% (MSCI World Index). However, it performed better than bonds (JP Morgan GBI Global Composite 7-10 years), which only grew 0.7% over the 12 months to September 2013.

Peter Hobbs, managing director & head of research, IPD, said: 'Beyond its use in analysing market trends and providing performance benchmarks, the index provides valuable insights into drivers of individual fund performance including the attribution of drivers of returns from fund structure (including debt, cash and costs), as well as direct real estate.'