EUROPE - Real estate needs to raise its level of professional standards - including performance measurement - to those of other asset classes, according to Guido Verhoef, head of private real estate at PGGM.
In an interview featured in IP Real Estate's Digital Supplement on Performance Measurement, which accompanies the November/December print edition, Verhoef said: "In the real estate industry, we have to compete with other asset classes in the portfolio - we have to make a case, and if we can't produce data and be transparent, real estate will lose out to other asset classes."
PGGM requires its fund managers to provide information to INREV and will not invest with managers that are less than transparent.
Verhoef said: "We require all the fund managers we select to comply with INREV requirements with respect to governance and supplying performance data. If they can provide information to us, they can provide it to INREV."
In the supplement's lead article, Henrik Kolind, head of property investments at Danish labour market fund Sampension, calls for greater transparency and greater coverage of the market by the indices already provided.
Sampension provides information to Investment Property Databank (IPD) on its own direct investments, but Kolind said his fund was in the minority.
"In Denmark, it is a very low percent," he said. "I don't think it covers more than 30% of the total property market. I think there are 25 members in Denmark who give information - that's not a very big part of the total market.
"To be more transparent, we need more information from more fund managers and more investors. The only way to do that is to talk to fund managers about how necessary it is for all of us to get a much more transparent market."
The supplement also highlights a further boost to transparency in performance measurement, which comes from IPD.
The company's co-founding director Ian Cullen said: "A well-constructed transaction-linked index (TLI), supported by continuous valuation evidence, may have a role as an additional barometer of market conditions at the most aggregated levels - i.e. all property and three sector.
"And more fundamentally, it should provide an authoritative evidence-based estimate of price volatility and so be of enormous potential use in risk modelling and asset allocation."
A TLI uses the valuation as a combined assessment of the various 'hedonic' or quality aspects of the asset and then adjusts for the precise market movement reflected in the sale price.
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