Returns for pan-European real estate funds fell slightly in 2015 to 13.5%, reflecting a cooling off in the core markets, according to analysis by MSCI.
Returns for pan-European real estate funds fell slightly in 2015 to 13.5%, reflecting a cooling off in the core markets, according to analysis by MSCI.
The performance for the year was down from 2014’s level of 14.1% and significantly lower than the June 2015 peak of 17.4%, the latest IPD Pan-Europe Quarterly Property Fund index found.
In the last quarter the funds returned 2.8%, measured in euros. Underlying real estate assets returned 2.9% over the quarter and 14.2% over the year. Capital return year-on-year slowed from its June peak of 10.5% to 8.0%, while income return stood at 5.8%, its lowest level in six and a half years.
Asset-level performance was tempered by a sharp slowdown for UK assets, with 12-month returns at 20.7% compared to their March 2015 peak of 35.0%. The UK remained the biggest driver of growth, ahead of Germany (down to 13.2% from 16.5% in June) and France, where returns increased to 14.1% from 9.1% in March.
MSCI said European funds were in good health despite the lower returns. Vice-president Mark Clacy-Jones said: ‘The components of the direct returns confirmed the good health of the European market. Capital return has been in positive territory for seven quarters in a row, following six years of negative or close-to-zero returns.’
The IPD Pan-European Quarterly Property Fund Index is based on a full sample of 15 core Pan-European open-ended funds that are appraised quarterly to IFRS standards with performance validated by MSCI.
