Global property returns are at their highest for four years, according to MSCI.
The total return on global property funds reached 13.5% last year, according to MSCI’s IPD Global Quarterly Property Fund Index.
Ken Greguski, executive director at MSCI, said: “In addition to offering the highest return in four years, Global Property Fund outperformed other asset classes for the first time since 2011.
“This is a result of uncertainty with economic conditions in many parts of the world, which impacted the equities markets – and monetary policies that have reduced returns in monetary instruments.”
The return is an increase from 12% in 2014.
The index, based on a sample of 93 funds, outperformed other asset classes.
Bonds achieved a total return of 1.6, equities 2.6%, and properties equities 3.7%.
North America delivered a 14% return, which MSCI said was largely a result of capital value growth in the US market.
“In North America, we saw the post-financial-crisis factors playing out as good performance in the properties market, and strong capital inflows fuelled a surge in capital value growth in North America,” Greguski said.
Leverage levels have declined from the 2009 levels, with some markets including the UK seeing virtually no leverage.
Low interest rates and solid asset performance have generated “meaningful positive leverage impact that amplifies overall fund performance”.
“This trend,” Greguski said, “is largely a result of investors’ appetite to snap the right properties, and they showed the willingness to increasingly rely on leverage to get what they believed would benefit the portfolio.”
Source: I&PE Real Estate