EUROPE – Portfolios that mixed listed real estate with non-listed holdings produced 50% higher returns over the last 10 years than those containing non-listed alone, new research has shown.

Fund performance data compiled by Consilia Capital revealed that an investor with 30% of assets allocated to international listed property had a total return of 91% between June 2003 and June 2013.

By comparison, UK non-listed real estate over the same decade gave a total return of 61%, the firm said at the European Public Real Estate Association's (EPRA) annual conference in Paris.

Alex Moss, managing director of Consilia, said: "Our findings show how investors are missing out on superior returns by having no exposure to the listed sector."

Respondents in the survey said their annual performance reviews discouraged investment in the listed property sector because of short-term volatility, which might be correlated with other equities, Consilia said.

The study showed that, in the market downturn between July 2007 and June 2009, the diminution in returns from a 30% allocation to listed property within a portfolio of otherwise non-listed property investments was only 2.2%.

In the four preceding years, however, the same combination produced 22% higher returns than non-listed alone.

From August 2009 to June 2013, the mix would have produced 13% returns, the research showed.

"There's every justification for using listed and adding it as a way of boosting performance," Moss said.

In a separate survey, 46% of respondents said they managed the listed property sector separately from their real estate portfolio.

This survey, compiled by Consilia and Property Funds Research, was based on responses from 56 organisations including 40 asset managers along with investors, self-managed pension funds, sovereign wealth funds, endowments and consultants.

Only 14% of respondents had an integrated team investing in listed as well as non-listed or direct property, and 39% outsourced management of their listed property allocation.

Moss said it was surprising that many institutions and investors treated the listed property sector as part of their equity allocation, with so few having it as part of their real estate portfolio.

But he said there was plenty of evidence this was changing.

For its 20% real estate allocation, he noted that UK auto-enrolment pensions provider National Employment Savings Trust (NEST) had opted for Legal & General's Hybrid Property fund, a vehicle that invests 70% in unlisted and 30% in listed real estate.

"People are less concerned with volatility and more concerned with performance," Moss said.

"There are big changes in the market that will have advantages for listed property."