European non-listed real estate funds continued to deliver positive returns in the third quarter of 2016, but the rate of growth has slowed, according to INREV.
INREV's Quarterly Index, which analyses the performance of 278 funds, showed that overall returns fell from 1.3% in Q2 2016 to 1% in Q3 of this year.
'While the brakes have clearly been applied to real estate market growth, European non-listed funds have continued to deliver a broadly positive performance this quarter. Arguably, these results reflect the continuing advantage that real estate has over other asset classes,' said Henri Vuong, INREV's director of research and market information. 'The standout drop in in the UK’s performance is probably an early indication of the impact of the Brexit vote. And it’ll be interesting to see how much, if at all, overall performance may shift in Q4 following the US Presidential Election.'
The performance of core funds decreased from 1.4% to 1.1% from Q2 to Q3, but value added funds remained stable with a total return of 0.3% in the third quarter.
The only market to decline in performance was the UK, where returns turned from a positive 0.7% over Q2 2016, to -1.0% in Q3 2016.
Meanwhile, Dutch funds gained momentum with performance increasing from 3.4% to 3.7%, and French and German funds rose 3.0% and 2.0% respectively.
Open end funds delivered a healthy performance of 1.3% over the quarter, while closed end funds saw a contraction in performance, with total return declining 0.1% over Q3. Residential was the best performing sector, with returns rising from 3.7% in Q2 to 4.2% in Q3. Industrial and logistics also delivered a positive return of 1.2% over Q3. All other sectors performed negatively, with returns of -0.2% for office and -0.3% for retail.
