This is the first publication of the INREV pan-European Annual Asset Level Index launched as a consultation release. It includes 6,038 assets valued at €151.6 billion as at end 2018, covering around 20 countries and all key real estate sectors.
This index measures the performance of the real estate assets across Europe on an annual basis. Annual performance is calculated using a chain-linking methodology and excludes the effects of leverage and vehicle level costs, fees and expenses. The results point toward the underlying strength and resilience of the non-listed real estate investment industry in Europe.
The best national performance came from the Netherlands with a robust total return of 15.46%, much of which was driven by strong capital growth in the residential sector. Germany and France posted total returns of 12.18% and 9.55%, respectively. By contrast, the UK – which represented the largest percentage allocation of the whole index (28.3%) – demonstrated the weakest performance of the major European countries with a total return of 5.89% in 2018. Just 1.17% of the UK’s overall performance was attributed to capital growth.
In terms of sectors, residential delivered the most compelling results with a total return of 16.36%, closely followed by industrial / logistics at 15.51%. The office sector achieved a total return of 9.48%.
Retail fared less well, with a total return of 4.15% and negative capital growth of -0.73%. Originally requested, and eagerly anticipated, by the non-listed real estate industry as a whole, the new consultation index is based on five years of historical quarterly data. It delivers data sets of pure real estate performance, stripped of leverage and financial structuring. The index will provide investors and managers with a deeper understanding of the drivers of real estate performance and risk. It will greatly improve transparency and enhance decisions about portfolio allocation and risk management.
Henri Vuong, INREV’s Director of Research and Market Information, explains:
‘This is an impressive set of returns that will no doubt reinforce investors’ current positive view of non-listed real estate, which is based on an underlying asset class in good health that’s built on strong foundations.’