IPD, an MSCI brand, has announced the fifth consultative release of the IPD Global Quarterly Property Fund Index, a significant initiative to measure fund-level real estate performance across global markets.
The global quarterly fund return accelerated in the quarter to June 2014, reaching 2.9%, a level not seen since March 2011. This brought the 12-month return to 11.4%, outperforming bonds but lagging equities and real estate equities.
The strong performance was driven by Europe, which showed a substantial acceleration compared with the previous quarter. The UK market return rose to 4.1% as at June 2014, up from 3.1% in March, while continental Europe returned 3.2% in June compared with 1.8% in March. Asia and North America delivered more moderate growth but both regained momentum after a slight slowdown in Q1. North America returned 2.7% and Asia Pacific returned 2.5%, both up from 2.2% in Q1.
The underlying assets included in the IPD Global Quarterly Property Fund Index returned 2.8% in the quarter to June 2014, their strongest quarterly performance since June 2011. This brought the 12-month return on underlying assets to 11.1%.
Mark Clacy-Jones, Vice President at MSCI, commented: “Capital appreciation is now dominating asset returns In the UK and North America, which both recorded double-digit performance over the last 12 months. And although income return is still the main driver of returns in Asia Pacific and Continental Europe, it should be noted that capital growth in Continental Europe reached 0.4% for the quarter. This is its highest level since the index started in 2008 and marks a return to positive territory for the first time since March 2011.”
The standout sector remained industrials, which outperformed on a quarterly and annual basis, while retail and residential lagged significantly over these timeframes.