Real Estate Property Funds

European Non-Listed Property Funds Return Negative for First the Time Since 2009

**European Non-Listed Property Funds Return Negative 0.6% in 2012**

The 2012 annual index of the European non-listed property funds group INREV, aggregating income return and capital growth, recorded a negative overall return for the first time since 2009, the group announced in a report on April 17.
Overall, performance for all 294 property funds included in the INREV’s annual index was -0.6 percent in 2012. Capital growth fell 3.8 percent, while income return averaged just 3.2 percent. By comparison, in the boom years of 2005 and 2006, INREV property funds posted total returns above 18 percent. For 2012, Southern Europe as well as Central and Eastern Europe delivered particularly low returns of -7.9 percent and -6.1 percent respectively, INREV said. Core funds, with a total return of 0.3 percent, outperformed value added funds, which plunged to -4.7 percent return overall. Funds launched in 2005 and 2006 returned -4.9 percent, compared to property investment vehicles launched between 2009 and 2012, which showed returns of 2.1 percent in aggregate.

Casper Hesp, director research and market information at INREV, said: “While different European countries are in varying states of economic health, the results of the Index show an obvious trend of investors continuing to opt for caution.”
Despite the negative performance of Europe’s non-listed property funds sector, INREV’s chief executive officer, Matthias Thomas, told the group’s annual meeting in Barcelona, Spain that the financial crisis and its aftermath forced the industry to re-examine itself, particularly in the relationships between investors and fund managers. “I believe the crisis has been more positive than negative for our industry,” Thomas said, as quoted by Property Investor Europe magazine. He added: “It has required us to contemplate and innovate and to reinvent ourselves.”

**INREV Innovations**
As part of its innovations, INREV has added regional sub-indices to its Annual Index and has launched a Global Index. The group said that this will improve transparency and investor knowledge by enabling them to accurately compare non-listed property funds with other real estate investments as well as with other asset classes such as private equity, bonds and equities.

INREV has steadily increased the number of regional sub-indices it is publishing, which now include Continental Europe, the Nordics, Central & Eastern Europe, Western Europe and Southern Europe. !m[INREV Innovations](/uploads/story/1949/thumbs/pic1_inline.png)The number of property funds participating in the index has also increased from 285 to 294. The Global Index, which was announced last summer and is backed by INREV, ANREV (the Asian association for investors in non-listed real estate vehicles) and NCREIF (the association of institutional real estate professionals) is progressing well. The calculation methodology is agreed and will ensure consistent comparisons. The first full results for core funds are expected to be published in May, while indices for value added and opportunity funds will follow at a later stage, INREV said.

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