The FTSE EPRA/NAREIT Global Real Estate Index fell again at the end of 2007, finishing at -4.8% in December. Global equity markets (-5.5%) also headed down, while the bond market was neutral for the month. All three real estate regions fell back in December. Asia-Pacific real estate fell 5.2%, Europe lost 4.3% and North America ended 4.6% in the red. In 2007, the Asia-Pacific region was the only region to complete the year on positive ground (+3.5%). Both North American (-23.3%) and European (-31.9%) real estate stocks experienced significant downturns in 2007. The aggregate Global return for 2007 was -16.1%.
The FTSE EPRA/NAREIT Global Real Estate Index fell again at the end of 2007, finishing at -4.8% in December. Global equity markets (-5.5%) also headed down, while the bond market was neutral for the month. All three real estate regions fell back in December. Asia-Pacific real estate fell 5.2%, Europe lost 4.3% and North America ended 4.6% in the red. In 2007, the Asia-Pacific region was the only region to complete the year on positive ground (+3.5%). Both North American (-23.3%) and European (-31.9%) real estate stocks experienced significant downturns in 2007. The aggregate Global return for 2007 was -16.1%.
Using compounded annual returns, over a five-year period, Global real estate outperformed Global equities and Global bonds significantly. On average, Global real estate returned 16.3% annually, Global equities advanced 11.7% in comparison, and Global bonds added 3.4%. As a result, over the total five-year period, Global real estate returned 113%, Global equities gained 74% and Global bonds advanced 18%.
The heavily weighted UK market fell 2.1% and France (-3.2%) ended the month further behind. The Netherlands (-3.1%) and Sweden (-5.2%) compounded the losses in the region. All European countries ended 2007 on negative territory. The UK (-36.3%) was worst affected by the market downturn, followed by France (-19.7%), Sweden (-18.5%), and the Netherlands (-12.3%). At a composite level, the EPRA/NAREIT Europe Index ended the year down 31.9%. Broad European volatility stands at approximately 14%.
Heading the European performers in December was UK retail player Development Securities (+21%). Primary Health Properties (UK) jumped 20%, followed by two other UK companies: Mucklow added 17% and Plaza Centers gained 11%. The only non-UK constituent in the top five performers was Technopolis of Finland (+10%). Capital & Regional finished December down 28% and subsequently held up the European performers. The company announced that the value of its Mall and Junction funds had fallen as much as 12% in November as the price of shopping centres declined.
