Nordic property funds delivered -2.3% total return in Q3 2011, and 9.0% for 12 months, according to the IPD Nordic Property Fund Index (NPFI), released by IPD yesterday (December 1, 2011).
The IPD NPFI measures Net Asset Value total returns from one valuation to the next. This is the third release of the IPD NPFI.
"The overall negative return delivered by the funds in the index is the first indication of the impact of the euro zone crisis on the Nordic property market," explained Christina Gustafsson, Managing Director at IPD Norden.
"Though partially insulated from the contagion fears in Southern Europe, uncertainty surrounding the possibility of falling back into recession is still impacting on Nordic values."
"However, the effects of currency should not be overlooked. Both the Swedish and Norwegian Krona have depreciated against the euro during the third quarter, which is likely to have had a negative impact on IPD NPFI's return, since the index is euro denominated."
The IPD Nordic Property Fund Index sponsored by Ernst & Young consists of 16 property funds with a combined Net Asset Value of 3.3 billion and a Gross Asset Value of 7.7 billion at September 2011. The gross loan-to-value ratio for the 16 funds was 57%.
The IPD NPFI is made up of funds primarily investing into Denmark, Sweden, Norway and Finland. It gives investors an unrivalled view into the unlisted fund sector in the Nordic region and aims to increase the transparency and credibility of the property fund market. IPD intends to increase the number of contributing funds in the index with each release.