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Signs of recovery and renewed investor confidence in non-listed real estate in Q4 2020

Negative impacts of COVID-19 continue to ease

17 March 2021, Amsterdam Results from the latest INREV Pan-European Quarterly Asset Level Index reveal a steady improvement in performance for Q4 2020, with total returns reaching 1.92% – a significant uplift compared with the 1.21% seen in Q3.

Capital growth improved to 1.00% on a quarterly basis compared to 0.27% in Q3. Income return dipped slightly  to 0.91%, versus 0.94% registered in Q3. These results reflect returning investor confidence, following a year of great uncertainty that saw annual total return of only 3.41% and disruption for the European non-listed real estate industry.

The INREV Quarterly Fund Index tells a similarly positive story, with a total return of 1.70% in Q4 2020, increasing from the 0.96% in the previous quarter. Investors’ continued preference for core strategies was reflected in improving total returns for core funds which hit 1.80%, up from 1.08% in Q3. Value added funds remained in negative territory, posting a total return of -0.06%. However, this is still an improvement on the previous quarter, up from -0.73%. The annual 2020 results highlight the diverging stories of core versus value added sentiment even more, with total returns of 2.71% and

-5.29% respectively.

Renewed confidence for the UK

From their weak position at a total return of -0.11% in Q3 2020, UK focused funds made a significant rebound with capital growth hitting positive territory in Q4 at both the fund level (0.60%) and the asset level (0.48%) for the very first time since Q2 2019 and Q4 2018, respectively. This move back into positive territory, came largely as a result of strong performance in the industrial/logistics sector, which accounted for 26.7% of the INREV UK Quarterly Fund Index and 33% of the INREV UK Asset Level Index, as well as the residential and student housing sectors. However, the 2020 annual UK returns remained in negative territory in the case of both of the above mentioned indices.

The upward trajectory for the UK points toward renewed investor confidence following the long-anticipated Brexit agreement, the recalibration of values, and the arrival of new or relatively new occupiers into the UK office market. In the tailwind sectors, such as industrial/logistics and residential/living, investors are now actively seeking new opportunities for long-term growth, while value added and opportunistic strategies are targeting the heavily repriced sectors, such as retail and hospitality.  

Despite the UK’s bounce-back, the 2020 annual UK returns remained in negative territory in the case of both of the above mentioned indices, leaving it behind other European markets and single country strategy funds. Germany stays at the top of the single country strategy leader board, achieving a Q4 total return of 2.94% in the INREV Quarterly Fund Index and 4.27% in the INREV Germany Quarterly Asset Level Index, reinforcing investors’ ongoing interest in this market. The annual total returns were reported at above 7.5% according to both measures. Similarly, France and the Netherlands also reported robust results, with quarterly total returns between 1.99% and 1.73% in the INREV Quarterly Asset Level Index, bringing each of these countries’ annual total returns for 2020 to 4.92%, and 6.03% respectively.

Positive growth across sectors

According to the INREV Pan-European Quarterly Asset Level Index, the end of the year saw improved performance across several sectors. Industrial/logistics was the best performing segment yet again, delivering a total return of 5.70%, compared to 3.09% recorded in Q3 2020. The residential and office sectors reported total returns of 1.88% and 1.84% respectively for Q4.

The retail sector showed the sixth consecutive quarter of negative performance, with a further deterioration in Q4 to a total return of -1.79% versus -1.09% in Q3 2020, according to the INREV Quarterly Asset Level Index, and yet another dip in capital growth to -2.73%. However, there is large dispersion within the sector, with Q4 total returns of 3.36% for supermarket/superstores, while at the other end of the spectrum, shopping centres reported a negative performance of -3.61%.

Improvements across rent and redemptions

Rent collection improved for both open and closed end funds during Q4 2020, according to INREV’s Valuations Questionnaire. In all, 89.2% of respondents indicated that they’d received 75-100% of their rent on time, an increase from 87.9% in Q3 2020.

The Q4 2020 Valuations Questionnaire provided further evidence of returning confidence showing a steep decline in managers applying the material uncertainty clause to their funds. This rate has fallen consistently over four consecutive quarters, hitting just 18% in Q4 2020, down from 27% the previous quarter and a record high of 57% in Q1 2020.

Similarly, not a single respondent indicated that their funds remain suspended to unit subscriptions and voluntary application of redemptions. This is a considerable improvement compared with 23.2% of respondents in Q2 and 5.9% in Q3.

Iryna Pylypchuk, INREV’s Director of Research and Market Information, said: ‘The latest results are reassuring, confirming a cautious return of confidence after a year of uncertainty brought about by the COVID-19 pandemic. The real estate market appears to be turning a corner with a more positive outlook on both the investor and the occupier side, albeit the latter may take longer to recover and will most likely see a gradual change of occupier profile.

‘Creditable performances in sectors such as industrials/logistics, residential and most living sectors, and gradually, offices, and in core markets like Germany, Netherlands and France, reinforce the picture of an asset class returning to stability, underpinned by renewed investor appetite for new opportunities. As we move into 2021, the European real estate market reveals a gradually expanding investable universe, with a large dispersion of performance and a greater choice of risk return opportunities than we saw pre-Covid.’

– Ends –

For further information, please contact:

Johlyn da Prato, johlyn.daprato@inrev.org  | +31 (0) 621397456

Justin St Clair-Charles, inrevteam@firstlightpr.com | +44 (0) 7769 644 059

Josie Workman, inrevteam@firstlightpr.com | +44 (0) 7460 325 392

Notes to Editors

About INREV Indices

INREV Quarterly Funds Index
The INREV Quarterly Funds Index is a net asset value and time-weighted return calculated using a Modified Dietz methodology. This quarter’s release includes 333 funds and represents a total gross asset value(GAV) of €269.7 billion as at the end of Q4 2020.


INREV Quarterly Asset Level Index
The INREV Quarterly Asset Level Index covers the performance of European real estate assets.  This latest release includes 6,068 assets from 31 companies and represents an aggregate market value of €171.1 billion as at end of Q4 2020. 


INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for institutional investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.8 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe.

INREV has 461 members which include 92 of the largest institutional investors as well as 69 of the 100 largest real estate fund managers, plus banks and advisors across Europe and elsewhere.

The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.