Pan-European property funds posted a negative return of 2% over the final quarter of 2012 as the eurozone crisis continued to take its toll, IPD said.
The negative quarterly performance was the third in a row as returns continued to be dragged down by value declines in the direct real estate market as a result of the eurozone crisis.
The IPD index is based on the full universe of pan-European open-ended funds that are appraised quarterly according to IFRS standards.
Despite their weaker 2012 performance, pan-European funds have continued to attract capital, enabling some to take advantage of the dislocations in the European real estate market, IPD said. During the final quarter of 2012, net investment came close to €500 mln, with France and Germany seeing the strongest inflows. For the first time in the history of the index, some divestment was recorded from the UK.
By the end of 2012, France and Germany comprised 50% of the index. The Benelux region and Central Europe also benefitted from relatively high exposure, while exposure to the Southern European countries of Italy, Portugal and Spain, as well as the UK and Nordics was low.
The Q4 2012 returns contrast starkly with those of other asset classes, with European equities posting a return over 15% for the year and real estate securities almost twice as strong as the broader equity market.
The returns are also weaker than other real estate fund markets, such as the US that posted double digit returns for 2012 as a whole.
IPD provides real estate benchmarking and portfolio analysis services in over 30 countries around the world.