Real estate returns rebound

European real estate returns improved during the fourth quarter thanks to growing investor confidence in the asset class.

The INREV Pan-European Quarterly Asset Level Index generated a total return of 1.92%, up from 1.21% during the third quarter.

The INREV Quarterly Fund Index, which represents 333 funds, tells a similarly positive story, with a total return of 1.70% during the fourth quarter, increasing from 0.96% in the previous quarter.

From their weak position at a total return of -0.11% during the third quarter, UK-focused funds made a significant rebound with capital growth hitting positive territory in the final quarter at both the fund level and the asset level for the first time since Q2 2019 and Q4 2018, respectively.

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.”