UK strongest performer in latest European non-listed fund index

The UK non-listed real estate market delivered the strongest performance in Europe in the second quarter, marking its first positive performance since Q2 2022. Latest figures from the INREV Quarterly Fund Index show a total return of 0.08% in Q2 2023 for the UK. This was driven by improved capital growth, which rose to -0.97%. This compares to a total return of -0.47% for the full index, driven by a decline in capital growth, which dipped to -1.24%. This was the fourth consecutive quarter of negative performance, equating to an overall decrease of -11.58% over the last four quarters. INREV said the UK’s strong performance reflected its position in the vanguard of market correction across the European non-listed real estate industry, which has been helped by the stabilisation of capital growth since the start of 2023. The Netherlands followed the UK with a total return of -1.29%, an improvement from -3.61% in the previous quarter. In contrast, Germany and France registered weaker Q2 performances in comparison to Q1, at -1.84% and -1.63%, respectively. Both countries were highly affected by the poor performance of their office assets, and decreasing net sentiment towards offices. As the “sick man of Europe”, Germany’s stuttering economy and negative GDP forecasts have expanded the real estate correction, putting the transactional market into a standstill until further adjustments in pricing crystalise. Similarly, France has experienced a lag in valuations and a lack of transactions, so the latest sharp adjustment in Q2 2023 performance is a move in the right direction. Industrial/logistics leads the correction into positive territory for the UK once again, with a substantial quarterly performance boost to 1.91% – far higher than the -19.7% seen in Q4 2022. In the Netherlands, the sector also hit a positive return of 0.19% for the first time over the same period. German industrial assets just squeezed above the baseline at 0.05%. By contrast, in France the sector’s performance remained negative at -0.97%. To send feedback, e-mail julia.cahill@eg.co.uk or tweet @EGJuliaC or @EGPropertyNews Image by Planet Observer/UIG/Shutterstock