In 2019, INREV launched the first edition of the Asset Level Index, following three years of consultation and development. As per the initial predictions of some of the Index’s early adopters, it has radically improved transparency of the European non-listed real estate market.
The Asset Level Index initiative was launched in 2015 and in 2019 we released the consultation index at the INREV Annual Conference in Venice. At that time the index included 6,200 assets with a total market value of €168 billion. By the end of Q3 2022 it included 6,626 assets with a total market value of €216.4 billion. At the beginning of this year, the index was moved out of consultation.
In January 2023, the Asset Level Index will be included in the annual INREV membership fee, catapulting it to centre stage
Commenting on the benefits of the Index, Guido Verhoef, PGGM’s Head of Private Real Estate, said: ‘We’ve been on the Asset Level Index journey from the beginning. Access to the level of data the Index provides has undoubtedly helped transform our decision-making capabilities. Now, the Index is about to get significantly bigger and that will make it even better. It feels like we’re making real progress toward the Holy Grail of fund to asset level attribution, which will be a huge advantage for the whole industry.’
INREV also launched the European ODCE Index, which came out of consultation with the Q1 2022 reporting in May 2022. By the end of 2021 it included 14 funds from 13 managers and a gross asset value (GAV) of €41.7 billion. Since then it has grown to 16 funds from 15 managers and a GAV of €46.6 billion by end of Q3 2022.
The Asset Level Index was built in an integrated data platform allowing contributors to access and analyse asset data in ways that had not been possible before. This new level of granularity provides the capability for contributors to significantly enhance the quality of their investment decision making. It is already providing greater consistency in terms of performance measurement methodology and comparability across different segments and markets at the most granular for the real estate level – asset.
In the past few years we have expanded this platform to include all INREV fund indices offering great potential to analyse across the full suite of indices. With these two indices officially forming part of the INREV suite of indices we are now looking to expand the ODCE Index’s financial metrics and extend transparency with asset to fund level attribution and reconciliation analysis.
Asset Level Index at centre stage
In January 2023, the Asset Level Index will be included in the annual INREV membership fee, catapulting it to centre stage. Members will no longer need a separate subscription. As more members provide data, a substantial increase in scale will dramatically boost the effectiveness and impact of the Index for the whole of European non-listed real estate industry.
INREV recognises its role in driving industry level transparency on the topic of ESG performance data and the potential link to financial performance data. We have added ESG KPIs to the Asset Level Index in Q1 2022 data collection. This allows us to show where the market is standing compared to net zero pathways, among other references.
Initial results from the pilot were published in April. Since then, further progress has been made. With more than €22 billion represented across around 1000 assets, the data enables a powerful illustration of the ESG journey that European commercial real estate is facing.
As with all things INREV, the key goal is to enhance ESG KPI’s data provision and data coverage. A number of investors/managers have expressed interest in joining the project and are expected to contribute to the next round of data collection in early 2023.
Work is underway to depict where the individual data contributors’ assets and portfolios stand in the context of their respective European markets and sectors in terms of the ESG KPIs. The next couple of years’ ambition is focused on a wider ESG KPI data utilisation and first steps have been taken in exploring the ability to link ESG to asset level performance.
Watch this space to stay informed on the progress of another potentially ground breaking initiative.