European commercial real estate funds register -9.3% returns in Q4

European commercial real estate funds register -9.3% returns in Q4

European real estate funds generated negative returns of -9.3% in the final quarter of 2022, taking the total return to -2.4% for the year. That compares with negative returns for property equities of -38.2% for 2022, according to data compiled by MSCI Real Assets.

The headwinds facing European commercial property continued into the final quarter of 2022, with all property types in the MSCI Pan-European Quarterly Property Fund Index posting negative returns at the end of the year.

”The decline in performance for balanced funds continued to be led by the industrial sector, which makes up 30% of the index. Retail proved more resilient in comparison, falling just 2.2%. The decline in total returns across all property types was steeper than that recorded during the depths of the 2008 global financial crisis,” says MSCI.

The Index tracks the performance of 19 open-ended cross border funds with net asset value NAV) of €51.6 billion, as of Dec. 31, 2022. 

David Green-Morgan, Global Head of Real Assets Research,  also observed:

· Country level returns continue to show a wide variation in Q4 from -1.3% in the Czech Republic to -8.2% in the Netherlands

· Rental growth across all property types accelerated in the final quarter from 1.2% to 1.5%

Source: MSCI