Germany and offices continue to see sharpest correction in European non-listed real estate performance

The March edition of the INREV Market Insights reveals that the correction in European real estate is still ongoing, with the Q4 2023 INREV Fund Index at a total return of -1.70% and the Asset Level Index's total return at -1.58%. Overall market performances remain negative, but sentiment improves. 

Key highlights:  

• The Consensus Indicator reported a headline reading of 50.2, a notable improvement from 41.8 in December 2023. All subindicators have improved. The Economic Indicator even passed the 50 mark, entering a more positive outlook for the year.  
• The main four markets of the Asset Level Index reported negative returns in Q4 2023. The Dutch market is the best performing at year-end at -0.10%, followed by the UK standing at -1.05%. Germany and France witnessed a severe downturn in Q4, hitting -3.63% and -4.15%, respectively, albeit partially attributed to the frequency of their valuations.   
• On the sector front, offices once again witnessed sharp correction across all markets, hitting their weakest quarter since the Index’s inception at -4.53%. Residential assets improved their Q4 return up to -0.29%, while industrial assets followed with -0.92%, although residential’s one-year annualised returns remain deep in the negative at -5.32%. 
• On the sentiment front, the UK is again leading in the net positive for the sixth consecutive quarter, while Germany remains firmly in the negative, concurring with the latest weak performance results. Southern Europe, notably Spain, Portugal and Italy are now established on the positive sentiment front for a second quarter in a row.  
• The living sectors remain high in participants’ preference on the net positive sentiment end. Simultaneously, the industrial/logistics sector consistently maintained a positive sentiment, while the retail sector emerged from net neutral sentiment this time around. 

While the correction for the European non-listed real estate market continues, the start of 2024 gives a glimpse of a positive outlook with the first net positive view on performance (8% of respondents) since December 2022 and a decline of views of investment risk. 

Download the Market Insights March 2024 report, the Consensus Indicator and the INREV Sentiment and Valuation Survey March 2024 infographic for more information, or read the press release here.