Real estate funds have beaten inflation over 2022
Real estate investment funds investing in the residential property sector have helped deliver above-inflation returns this year, data has found.
Market analysis by one real estate fund, the Alliance Fund, has also revealed that the average property investor using real estate funds as an avenue of investment would have seen a return of 11.5 per cent in the last 12 months.
We’re also seeing the evolution of this avenue of investment, with many challenger funds.
Iain Crawford, Alliance Fund
The UK’s most prominent funds are sitting on an average Nav of 1.3mn, having seen growth of 11.1 per cent on an annual basis.
Currently, the average Nav across 46 of the nation’s most established real estate funds sits at £1.27bn, with M&G Secured Property Income Fund achieving a Nav just shy of £4.67bn.
According to the chief executive of Alliance Fund, Iain Crawford, although all investments carry an element of risk, the average return provided when investing in a real estate fund has been robust.
He said: “To say the least, and the space is growing by the day to ensure investors have even further choice when investing.
“There are already some firmly established funds out there, but we’re also seeing the evolution of this avenue of investment, with many challenger funds bringing something new to the sector.”
Top 10 funds in terms of 12-month performance percentage change
| found name | NAV £m – Q3, 2022 | Annual change NAV £m |
1 year change performance % |
| Nuveen Real Estate UK Retail Warehouse Fund | 344.8 | 24.60% | 32.3 |
| Grosvenor Liverpool Fund | 271 | 85.10% | 20 |
| Industrial Property Investment Fund | 3363.3 | 19.80% | 19.4 |
| Tritax Property Income Fund | 231.6 | 13.10% | 17.5 |
| Patrizia Hanover Property Unit Trust | 603.3 | 18.40% | 17.1 |
| Nuveen Real Estate UK Property Fund | 182.4 | 7.80% | 16.8 |
| Charity Property Fund | 1419.6 | 17.20% | 16.1 |
| Kames Capital UK Active Value Property Unit Trust | 186.3 | -8.50% | 16.1 |
| Royal London UK Real Estate Fund | 3758.8 | 19.00% | 15.9 |
| Triton Property Fund LP | 1222.3 | 17.10% | 15.4 |
Source: AREF/Alliance Fund
Real estate funds come in all shapes and sizes, allowing for collective investment from numerous investors, which are pooled together to purchase real estate assets, most commonly residential and commercial real estate.
reaction
The Association of Investment Companies, whose members are UK-listed investment companies, does not have all of the funds on the AREF as its member companies, as it does not include funds or unit trusts.
However, speaking more generally to the performance figures of property investment over the past year, Annabel Brodie-Smith, communications director of the AIC, said: “The news that open-ended property funds have been suspended yet again has confirmed that the best investment vehicle for a hard-to-sell asset like property is an investment company.”
Property investment companies are usually referred to as Reits. Open-ended property funds hold considerable amounts of cash but still cannot sell property quickly enough to meet redemption requests when confidence falls.
They are then forced to suspend, meaning investors cannot buy or sell them.
Many analysts think the sell-off has created buying opportunities in the property investment company sector.
Annabel Brodie-Smith, AIC