Performance of European non-listed real estate funds returned to positive territory for the first time since 2007, according to the inaugural quarterly index results for the sector.
The first ever INREV Quarterly Index shows a return of 2.5% in the first quarter of 2010 and 1.5% in the second quarter in local currencies. This compares to an annual performance of -7.8% in 2009.
The UK market continued to lead the recovery as it returned 6.3% in quarter one and 2.9% in quarter two. This was considerably higher than continental Europe at 0.4% and 0.7% respectively. However, the varied rates of recovery reflect the different shapes of the downturn with the UK experiencing a deeper dip from which recovery has been at a quicker pace.
"The non-listed property funds industry is back in positive figures but we continue to see a distinct difference between the pace of recovery for the UK and the continent," said Lonneke Löwik, Director of Research and Market Information, INREV.
"The UK has experienced a mixed two quarters with overall positive growth but one that slowed in the second quarter. The continent may appear slower in its recovery but its impact of the downturn was not so deeply felt in the first place."
The publication of a quarterly index is a major step forward for performance measurement in the non-listed property funds industry. It offers investors and fund managers the first real chance to incorporate industry-level returns into their quarterly performance evaluation work for existing fund investments.
"This new INREV Quarterly Index sees the industry reach a new milestone," said Matthias Thomas, CEO, INREV. "As the non-listed property funds sector matures it requires deeper and more frequent data to help it understand and benchmark performance. It is testament to the importance of this initiative that nearly all the non-listed property funds able to provide quarterly data have positively supported this quarterly index," said Matthias Thomas, CEO, INREV.
The results are based on a sample of 207 funds, the vast majority of which already contribute to the established annual INREV Index. The next update of the INREV Quarterly Index will be published in December 2010.