The pace of correction of the European asset-level performance accelerates in Q4 2023

The INREV European Quarterly Asset Level Index recorded a total return of -1.58% in Q4 2023, extending its negative performance streak to six consecutive quarters. This quarter-on-quarter decline of 119bps was primarily driven by negative capital growth of -2.57%. The one-year rolling return stood at -4.09%. 

Despite continued negative returns across the four major European markets this quarter, Dutch assets maintained their leading position for a second consecutive quarter. This performance, driven by their residential and retail portfolios, resulted in a modest return of -0.10%. The UK followed with a return of -1.05% (-76 bps). Germany and France experienced sharper declines at -3.63% (-257 bps) and -4.15% (-277 bps) respectively, explained by the underperformance of their office assets, along with differences in valuation practices compared to other countries. 

Office assets witnessed their weakest performance since inception, delivering a return of -4.53% (-242 bps q-o-q). Conversely, residential assets emerged as the strongest performing sector among the four main ones, albeit with a negative return of -0.29%. After two consecutive quarters in positive territory, industrial/logistics assets dipped to -0.92% in Q4. Similarly, retail assets concluded the year with negative returns of -0.69%, following three quarters above the 0 mark. 

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