“The new INREV Indices are the clearest sign to date of the maturing market for non-listed real estate investment in Europe”, said Phillip Rose, Co-chairman of INREV’s Performance and Benchmarking Committee which last week announced the go-ahead for INREV’s ambitious project to measure unlisted real estate funds’ performance across Europe.
“The Indices are being launched because investors want to invest across geographies and because there is now a critical mass of quality, transparent vehicles to make an index possible”, Rose explains. “While the INREV Indices will start on mostly an annual basis, we expect a number of markets to move fairly quickly to semi-annual reporting and ultimately to move to quarterly reporting in line with the best practice in global equities.”
The indices remove a significant deterrent to institutional investment in European non-listed real estate funds: the fact that there has historically been no satisfactory means of benchmarking performance.
“Without a benchmark”, says Rose, “you can’t tell whether you’ve outperformed or underperformed. In addition to expanding the investor universe, the INREV Indices will increase information transparency, crossmarket comparisons and investment efficiency.”
“The INREV Indices will cover most major real estate markets in Europe and many of the smaller ones. Indices are planned for Austria, Belgium, France, Germany, Ireland, Italy, The Netherlands, Spain, Switzerland and the UK”, said INREV Chief Executive, Judy Hill.
Whenever possible, INREV intends to provide Sub-Indices for property sectors including office, retail, industrial and residential. These will also be separate indices for institutional funds and retail investor funds, and INREV is also working towards management style indices, classifying funds as core, valueadded and opportunistic. The capstone to the project will be an All Funds Index: a barometer of the entire European private real estate funds industry.
INREV is working closely with IPD, who will be responsible for supervising data collection, confidentiality and the index calculation process. INREV is seeking industry comment by 13th December on its white paper issued last week; the INREV Indices will be released at INREV’s first conference in April next year.