MSCI Inc. has recorded a 10% total return in Pan-Europe property in 2015, as indicated in the IPD Pan-Europe Annual Property Index.
The index return of 10% in 2015 is an increase from the previous year’s 9.4%. The index measures the performance of real estate markets in 18 countries inside and outside the Eurozone during the calendar year.
Last year’s top performing markets in the index saw their growth trimmed. Ireland’s total return moderated to 25% from 40% in 2014; however, it maintained the highest return in the index. The United Kingdom, which in 2014 achieved the highest behind Ireland with 17.8% total return, dropped to fourth highest as return declined to 13.1%.
Total return in the Spanish property market, which has a history of volatility and been slow to recover in the current cycle, rose to its highest level since 2006 and the second highest return in the index at 15.3%, up from 9.4% in 2014. Sweden experienced the largest growth in total return in 2015 as it jumped to 14.1% from 8.0% in 2014, the third highest in the index. Total return also jumped significantly in Portugal, rising to 12.1%, the fifth highest, from 7.2% in 2014. The total return in Hungary and Czech Republic also rose markedly.
Italy, the weakest performing market in this year’s index results returned 4.2%, up from 3.5% in 2014 as capital values continued to decline, albeit marginally at -0.9%.
Overall, total return in all the Nordic countries increased, as did in Central and Southern Europe, France and Germany. Belgian returns declined slightly to 6.4% from 6.6%.
The index is based on the IPD indexes for Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the UK, as well as the KTI Index for Finland.
The UK market makes up more than a fifth of the index at 20.2%; followed by France, 18.4%; and Germany, 18.0%. Together, they comprise more than half of the weight of the index.
Colm Lauder, vice president, MSCI, explained: “The slowdown in the two of the keenest markets of 2014, Ireland and the UK, reflects a further stabilization in the pace of capital value growth in both markets leading to a moderation in total returns. Though, both of these markets remained among the top performing in the index, showing that commercial investors remained firmly interested in Irish and British property investment.
“Simultaneously, the growth across Continental Europe, particularly France and Spain, signals that, at least to some degree, investors are branching out to take advantage and tap into new opportunities in these still recovering markets.”
The IPD Pan-Europe Annual Property Index tracked the performance of 49,578 properties, 919 funds; and combined capital value of 731.4 billion euros.
