UK non-listed real estate funds delivered a performance of 14.9% in 2010 contributing significantly to the general upsurge in fortunes for the sector, according to the INREV Annual Index 2010 published yesterday (April 27, 2011).
For the first time since 2007, the European non-listed real estate funds sector delivered positive annual performance. The net asset value-based return reached 7.4% in local currency - up from -7.7% in 2009. Continental European funds advanced at a slower rate than the UK delivering a performance of 3.8% in 2010 compared with -8.2% in the previous year.
"The general picture from the Annual Index 2010 is cause for cautious optimism. The strong performance figures have been driven largely by the recovery in the UK market which builds on the trend we saw beginning to emerge in 2009. France also performed well with returns of 11.2%. The relatively greater transparency and liquidity of these two markets could explain the rapidly improving conditions," said Casper Hesp, Senior Research Manager, INREV.
Income returns have contributed more to the overall performance of continental Europe than growth in capital values, echoing the findings of INREV's fourth Quarterly Index published in March. Core funds returned a performance of 7.5% in 2010 just ahead of value added funds at 7.3%. This represents a strong improvement for value added funds, which underperformed core funds by 11.6% in 2008 and 8.7% in 2009.
Annual Index improves consistency of measurement and reporting
The Annual Index 2010 has notched up several important 'firsts': almost 40% of participating funds used the INREV NAV standard; nearly two thirds used the RICS valuation standard; and marginally less than 100% used external valuers to value their property assets.
These statistics are significant because they reinforce INREV's strategic ambition to bring greater transparency to the non-listed real estate funds sector by establishing universal standards of measurement.
"We should all applaud these developments. Initiatives such as the INREV NAV, for example, should be embraced and adopted by all fund managers and investors. This way, we can work together as an industry to make more meaningful comparative assessments of funds. It's about being better able to compare apples with apples," commented Maarten van der Spek, Senior Strategist at PGGM Investments and co-chair of the INREV Performance Measurement and Benchmarking Committee.
Another critical new development for the INREV Annual Index is the fact that this latest release has been frozen. This removes the historic difficulty of indices being subject to change and locks down figures between 2001-2010; providing the industry with the basis for a consistent, standard index, for the first time.
"Freezing the index is an important step, which means we'll now have a much better all-round picture of performance. It complements the introduction of INREV's quarterly indices that were introduced last year. These improvements to the Index will give fund managers and investors a much clearer and more accurate view of the market," concluded Matthias Thomas, INREV CEO.
Source: Firstlight PR