Swedish funds turned in the best performance last year of those included in IPD's Pan-European Property Fund Index, delivering a return to investors of 7.2% and direct property returns of 14.6%. This compares with an investor return for European funds as a whole of 4.1%, reflecting underlying direct property returns of 6.8%. Italy was the worst performer, delivering negative direct property returns of 4.1%.
Swedish funds turned in the best performance last year of those included in IPD's Pan-European Property Fund Index, delivering a return to investors of 7.2% and direct property returns of 14.6%. This compares with an investor return for European funds as a whole of 4.1%, reflecting underlying direct property returns of 6.8%. Italy was the worst performer, delivering negative direct property returns of 4.1%.
Based on a peer group of 16 open-ended funds with a total value of EUR 11.2 bn invested across Europe, the pan-European index showed positive returns for the second year in a row, IPD said. This reflects the long-term stability of pan-European funds despite eurozone contagion and falling confidence in the future of the European currency.
At an underlying asset level, the index showed large variations per country. Germany and France, which comprise nearly half of the index, delivered a stable performance in 2011 with direct property returns of 8.4% and 7% respectively. The largest drags on performance came from a number of southern European markets, notably Spain (0.6%) and Italy (-4.1%), with the Netherlands providing a stable return of 4.2%. At the other end of the spectrum, Sweden was followed by the UK (11.8%) and CEE (8.9%). The strong returns in these three regions also reflected their stronger currencies versus the euro in the current climate.
For the first time, the index also reported quarterly results for a pan-European sample, both at the fund NAV (Net Asset Value) level, and the direct level (based on the underlying valuation of properties within the participating funds). The underlying direct real estate performance for Q4 2011 was 1.7% with an overall end investor return of 0.9% at the NAV level.
‘This new index and the data behind it offers a huge step forward in the level of detail available for managers and investors alike, helping us to better understand European real estate performance,’ said Doug Rowlands, head of multinational services at IPD.
Simon Mallinson, director of European Research at Invesco Real Estate, added: ‘Investors are increasingly asking for ways to compare and contrast manager performance and strategy and this index will allow this, as well as delivering a better set of tools for fund managers to understand how to improve performance and mitigate risk’.
