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27. April 2012 
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Pan European Fund investment revives
IPD’s new data on Pan-European property investment funds shows that these vehicles have been investing strongly in a number of key national markets over the last two years, albeit at levels considerably below those seen in the late 2000s.
Through 2011, the lion’s share of net investment by Pan-European funds was allocated to the UK, Germany and Central and Eastern Europe. These three locations accounted for €961m out of the total €1.2bn of net investment that such funds undertook during the year.
This pattern of investment by Pan-European funds in large part reflected the perceived risk profiles of national markets in the context of ongoing Eurozone difficulties. Germany emerged through 2011 as by far the strongest financial and economic power within the Eurozone while the UK gained from its independent currency and the status of London as a safe haven in the eyes of many investors.
France, in contrast, saw a falling away of investment demand through the year, despite being the country with the largest asset allocation amongst these Pan-European funds, with around one-third of the total value of €11.2bn at the end of 2011. Germany is the second most invested market, followed by the UK.
Investment levels for these funds have gradually revived over the last three years as confidence in the European markets has been rebuilding. In 2010 and 2011 net investment of just over €1bn in each year was well up on the €562m recorded for 2009, but was still nowhere near the heady levels of 2007 and 2008, when a peak annual investment of almost €4bn was achieved. Nevertheless, the value of assets under management in these funds has continued to grow, and now stands at €11.2bn.
It should be emphasised that these figures relate to the investment in and value of the assets held within the fund structures analysed. IPD’s new Pan European Funds Index and supporting data permit the analysis of performance both at the fund and the asset level, the first time that this has been possible for these kinds of investment in Europe.
The Index is tightly restricted to open-ended cross-border funds which employ a full quarterly open market valuation regime in accordance with RICS red book or similar standards. As such it represents a significant step forward in improving the transparency in this kind of vehicle, and increasing understanding of the drivers of their performance and risk profiles. The index is based on a peer group of 16 open-ended funds.
In 2011 the direct property returns for Pan European Funds stood at 6.8%, just shy of the 7.0% return for 2010, but considerably above the net asset value return of 4.1%. This reflected the fact that other assets, including cash, held by the funds dragged down their performance through the year.
Through 2011, the lion’s share of net investment by Pan-European funds was allocated to the UK, Germany and Central and Eastern Europe. These three locations accounted for €961m out of the total €1.2bn of net investment that such funds undertook during the year.
This pattern of investment by Pan-European funds in large part reflected the perceived risk profiles of national markets in the context of ongoing Eurozone difficulties. Germany emerged through 2011 as by far the strongest financial and economic power within the Eurozone while the UK gained from its independent currency and the status of London as a safe haven in the eyes of many investors.
France, in contrast, saw a falling away of investment demand through the year, despite being the country with the largest asset allocation amongst these Pan-European funds, with around one-third of the total value of €11.2bn at the end of 2011. Germany is the second most invested market, followed by the UK.
Investment levels for these funds have gradually revived over the last three years as confidence in the European markets has been rebuilding. In 2010 and 2011 net investment of just over €1bn in each year was well up on the €562m recorded for 2009, but was still nowhere near the heady levels of 2007 and 2008, when a peak annual investment of almost €4bn was achieved. Nevertheless, the value of assets under management in these funds has continued to grow, and now stands at €11.2bn.
It should be emphasised that these figures relate to the investment in and value of the assets held within the fund structures analysed. IPD’s new Pan European Funds Index and supporting data permit the analysis of performance both at the fund and the asset level, the first time that this has been possible for these kinds of investment in Europe.
The Index is tightly restricted to open-ended cross-border funds which employ a full quarterly open market valuation regime in accordance with RICS red book or similar standards. As such it represents a significant step forward in improving the transparency in this kind of vehicle, and increasing understanding of the drivers of their performance and risk profiles. The index is based on a peer group of 16 open-ended funds.
In 2011 the direct property returns for Pan European Funds stood at 6.8%, just shy of the 7.0% return for 2010, but considerably above the net asset value return of 4.1%. This reflected the fact that other assets, including cash, held by the funds dragged down their performance through the year.
