The Asian Association for Investors in Non-listed Real Estate Vehicles (ANREV) has launched the first “industry performance measurement tool” for non-listed real estate funds in Asia.
Almost one year after revealing its plans for the index, the association announced today its initial findings from the contributions of 50 funds which show that Asian non-listed real estate funds in Asia returned 9.8 percent in 2010.
ANREV, which now has 138 members from 14 different countries, announced the launch of the index today in the same week it held its yearly conference in Hong Kong.
Based on a model used by its European affiliate INREV, the ANREV Index measures annual net asset value-based performance taking into account the effect of fees and leverage. The Index, which is not frozen to allow for the initial sample size to expand over time, is using data that stretches back to 2006.
Chris Reilly, director of property Asia for Henderson Global Investors, and chairman of the ANREV Performance Measurement Committee, said: “It is interesting to have a set of performance figures for the industry as a reference point, but the more important achievement is this first step to providing investors with a reliable and meaningful measurement tool.”
He added: “The index was an important initiative highlighted as a priority by ANREV investor members. They know that investment capital can more easily flow to sectors where performance can be better evaluated and understood.”
The positive initial performance figure of 9.8 percent compares favourably to the -15.9 percent returned in 2009, ANREV said.
The positive result came despite “underperformance” in the Japanese market “which continues to cause a drag on overall returns,” the association said. With Japan taken out of the picture, the return for 2010 from Asia funds was 17.6 percent. In isolation, Japan returned -17.6 percent for the same period.
ANREV highlighted, however, that Japanese funds accounted for 45 percent of the overall sample pool’s assets. “This shows both the importance of the Japan market for investors due to its size and relative maturity in the region but also the impact that it can have on portfolios as it continues to underperform.
ANREV apportioned blame for Japan’s poor performance to the “negative impact of leverage in a falling market” – the five-year average leverage level in Japan was 73 percent compared to 44 percent in the rest of Asia.
Other than the Japanese funds which participated in the index, Singaporean funds accounted for 14.8 percent and Chinese funds accounted for 12.9 percent.