Non-listed real estate returns remain strong, despite slowdown

Non-listed real estate funds showed a marginal decline in overall performance with total returns of 1.74 percent versus 1.95 percent in third quarter, according to INREV Quarterly Index for fourth quarter 2018, which was recently published.

“Despite the fourth quarter slowdown, investors should remain buoyed by the 12-month rolling total return of 8.34 percent, which suggests real estate remains in rude health,” said Henri Vuong, INREV director of research and market information.

“What may be more likely to play on their minds, however, is the fourth consecutive quarter Brexit-inspired decline in U.K. funds; and the particularly sluggish performance of retail, which headed into negative territory.”

Highlights include:

• Softening returns were driven by a drop in capital growth from 1.2 percent to 0.5 percent in fourth quarter 2018
• Value-added funds took the lead against core funds with returns of 2.09 percent and 1.71 percent, respectively
• Both closed-end and open-end funds were in slowdown in fourth quarter recording 0.92 percent and 1.92 percent, respectively
• Dutch-focused funds ended 2018 with a remarkable 12-month rolling performance of 15.76 percent
• U.K.–focused funds deteriorated sharply from 1.46 percent previously to 0.48 percent in fourth quarter, a fourth consecutive drop in quarterly returns
• Performance of residential funds dropped from 4.3 percent to 3.97 percent in fourth quarter, but maintained their dominance over all other sectors; and retail funds entered negative territory dropping from 0.95 percent to –0.61 percent in fourth quarter

To read the full report, click here.