The APFIPP/IPD Portugal Property Fund Index, released today, showed that property investment funds returned an annual total return of -1.6%, at fund level, in March 2013.
The total return, in negative territory for the second consecutive quarter, is the lowest annual performance recorded by the index, and reveals a contraction of 0.4% when compared with the annual return delivered at the end of December 2012, as well as a 2.5% contraction compared with March 2012.
Portuguese property funds underperformed both equities (MSCI Portugal) and bonds (JP Morgan GBI 7-10 year), which delivered annual total returns of 6.8% and 73.8% respectively, to March 2013.
The decline in performance is seen in both fund categories – open ended and closed ended funds.
The open-ended funds achieved an annual total return of -0.7%, while the closed-ended funds delivered a return of -3.9% to March 2013, reflecting a decline in performance of 248 and 226 basis points respectively, when compared with the returns recorded in the first quarter of 2012.
António Gil Machado, Director of IPD Portugal and Brazil said, “The prolonged stagnation of the Portuguese economy has put property market rents under continuous pressure, which puts the latest results into context. Under the dual impacts of falling rental values and rising vacancy rates, capital values have been re-adjusting.
“It will be necessary to see an improvement in the economic environment before capital values can once again grow. However, even in a very difficult economic environment, property reveals a lower volatility when compared to other asset classes and protects, in a remarkable way, savings over the medium and long term.”
In the first quarter of 2013, the property investment fund Solução Arrendamento has been added to the index sample. As of 31 March 2013, the closed ended fund PREF has not been included in the calculation of the APFIPP/IPD Portugal Property Fund Index.
The APFIPP/IPD Portugal Property Fund Index is sponsored by PwC – and consists of 39 property funds with Gross Asset Value (GAV) under management of €7.0 billion as at the end of Q1 2013.