Global property fund returns moderate after recent high

Global property funds recorded a return of 7.8 percent at net asset value level in 2016, according to MSCI’s IPD Global Quarterly Property Fund Index.

The NAV return of 7.8 percent was a decrease from 10.6 percent 12-month return recorded in September 2016 and 13.5 percent for 2015. This represented a decline of 570 basis points since the index reached its four-year high in December 2015. The 2016 return of 7.8 percent outperformed global bonds but fell behind global equities.

At the regional direct asset level, Asia Pacific recorded a total return of 10.7 percent in 2016, Europe had a return of 8.9 percent and North America had a return of 7.8 percent. Funds in all regions saw declining returns through 2016, with the difference ranging from 70 basis points for Asia to 490 basis points for North America. The United Kingdom experienced a still larger decline of 870 basis points, driven by value depreciation of –0.8 percent, contrasting with appreciation of 7.6 percent in 2015.

By sector, industrial properties continued to outperform other property types and were the only asset type in 2016 to outperform the index over one-, three- and five-year annualized periods.