Returns from global property funds fell about six percentage points last year with Europe funds ranking second lowest.
At the net asset value level the 7.8% return globally in 2016 compared with a 13.5% return in 2015.
In Europe the return was 8.9% – higher than in North America (7.8%) but lower than Asia Pacific (10.7%).
Funds in all regions saw declining returns and the UK experienced a large decline of 870 bps, driven by a 0.8% drop in values. UK values in 2015 had increased by 7.6%.
Globally, returns by September had looked more positive at 10.6%.
MSCI’s research is based on the IPD Global Quarterly Property Fund Index, which samples the returns of 98 listed, core and open-ended funds across the globe.
Ken Greguski, of MSCI, said: “We saw a significant moderation in the performance of property funds in 2016, as economic and geopolitical risks began to impact markets, particularly in the second half of the year. But the index’s three and five-year returns remain in double-digits, reflecting the solid recent performance of real estate investments.”
By sector, industrial properties continued to outperform other property types and were the only asset type in 2016 to outperform the index over one, three and five-year annualised periods.
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