European real estate funds generated a 3.7% return last year, contrasting with the negative 9.3% return produced by equity funds in the same period, according to the latest MCSI research.
MSCI’s quarterly index, which tracks 28 private real estate debt funds in Europe with a combined net asset value of €9.2bn, found that whole-loan funds outperformed, delivering a 7.4% return.
Senior loan funds, which make up 53% of the net asset value of the funds tracked by the index, returned 5.8%.
Subordinated or mezzanine loan funds produced a -8.6% return, which was slightly better than real estate equity funds last year.
Will Robson, global head of real estate solutions research at MSCI, said: “While some real estate investors have been waiting for clear signals on when it may be prudent to dive back into the market during this period of heightened uncertainty, some have been paying closer attention to potentially more attractive opportunities further up the capital stack.
“Real estate debt has attracted interest from investors in recent times due to the higher-interest-rate environment and the perception of more stable returns in a period of falling values.”
Image by Stocktake/imageBROKER/Shutterstock
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