Market Information

A recipe for rich data

Asset Level Index coming to fruition

Big data already dominates virtually every aspect of human existence. It's a situation that will only intensify, but the volume of data alone is not the end game. Quality and depth are critical factors in defining the relative usefulness of any data set. 

None of this is news to readers of IQ. But what is worth reiterating is this industry’s unremitting focus on improving, refining and adding to the breadth of indices and analysis. The aim is to optimise access to the best available insight and knowledge and so enhance investment decision making.

While INREV’s current stable of data products is wide-ranging, it’ll never be entirely comprehensive. That means there’ll always be something new, and the latest innovation is the Asset Level Index.

Since 2016, when the concept of the Asset Level Index was first announced, a huge amount of work has been done by a dedicated group of INREV members, working with the INREV research and market information team to get it to its near final iteration. There’s work left to do, but the first edition of the index, the consultation index will be available next April.

With only a few months to go there is excited anticipation of the benefits that the index will deliver. For those who have been most closely involved in the project, to date, there’s a clear consensus that the index has the potential to radically, and very positively, impact the non-listed real estate industry.

At a macro level, the index has an important part to play in improving the overall level of transparency of information within real estate which, compared with other asset classes, is still lacking. The quality and richness of data from the index will help demonstrate that non-listed real estate deserves to be considered as a worthy peer to other more established asset classes.

Large institutional investors are bound by the need to invest in transparent asset classes, using historical data to model future decisions about asset allocations. There’s a justifiable assumption that, in providing clearer visibility of underlying assets, the index could actually encourage greater capital allocations to real estate from these participants.

As an industry-wide initiative, the index benefits from a collective, vested interest in its success

It will, for the first time, certainly ensure that rich data is available quarterly throughout Europe. This will help bring greater consistency across different countries – especially in terms of performance measurement methodology and comparability of different types of real estate investments.

The index also has the potential to deliver a global impact. The scope for participants to include data on their holdings in other regions such as America and Asia, and combine this with data generated locally in these regions, makes performance comparisons on a global basis eminently achievable. 

At a more granular level, the Asset Level Index has a great deal to offer in broadening participants' understanding of asset and fund level performance, and improving communications and alignment between managers and investors. 

With data sets of pure real estate performance – stripped of leverage and financial structuring – the industry will develop a deeper understanding of performance and risk.
The direct benefit of this enhanced knowledge will be an ability to make more informed decisions about portfolio and risk management; and capital allocations across sectors and geographies.

However, the index is not effort-neutral. The outputs and outcomes will only be as good as the inputs, so the index will require as broad a participation as possible. For readers who may still have questions about the perceived scale of work that could be required, it’s worth noting that the index platform and data input tools have been carefully selected and designed precisely to make contributing information as painless as possible - even if not completely pain-free. 

Similarly, the index analysis tool is intended to make interpretation of data straightforward, intuitive and comprehensive. Contributors to the index will be able to filter data according to their specific requirements and access deeper insights into the drivers of vehicle performance, at the click of a button.

As an industry-wide initiative, the index benefits from a collective, vested interest in its success. That’s not quite the same as a guarantee, but mass participation is a powerful engine. And there’s a general sense of optimism that with the right levels of support the Asset Level Index will not just meet, but exceed, the industry’s expectations

To participate in the Asset Level Index, contact Vitaliy Tonenchuk, +31 (0)20 235 8622