Europe property funds post first capital rise since 2007

Continental European non-listed real estate funds have posted their first positive quarterly capital growth since 2007, as growth and confidence returns to the sector, an industry group said on Thursday.

Capital growth in the third quarter of 2010 was 0.7 percent, compared to negative readings for 2008, 2009 and the first two quarters of this year, said INREV, the European Association for Investors in Non-listed Real Estate vehicles.

"The continued improvement of the … market is a substantial indicator that capital growth and confidence is flowing back into Europe's non-listed real estate funds," said INREV senior research manager Casper Hesp.

The improvement resulted in a total return of 1.4 percent for the quarter, according to the INREV Quarterly Index, which samples results from 208 European funds.

In a separate study, INREV said management fees charged by the real estate funds have come down significantly since peaking at the height of the market in 2007, with the lowest fees currently seen for funds investing in the UK and Germany.

INREV's 2010 Management Fees and Terms Study also showed that fees charged by value-added funds launched in 2008 for example, dropped to 0.44 percent of gross asset value this year, down from a sector average of 0.76 percent in 2007.