European prime property prices are too high, experts warn

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Prime property in Europe is no longer driven by fundamentals and looks expensive, warned speakers at the launch of IPD's pan-European Property Fund Index.

 

Nathalie Caillard, head of the real estate and infrastructure portfolios at Caisse des Dépôts also spoke at the event, detailing the strategy of its savings fund.

Ian Cullen, IPD co-founder, and Doug Rowlands, IPD’s head of multinational services, addressed guests, describing the new index, its composition, and performance in 2011. The new quarterly index comprises 16 funds with assets under management totalling €11.2bn. To qualify for the Index funds must by open-ended, invest in at least three European regions, cap leverage at 60% GAV, and must undergo Royal Institution of Chartered Surveyors-standard quarterly third-party appraisals. It is the first investable European property index.

Cullen suggested that the launch of European property’s first investable quarterly index reflects the maturing of the market, which sees a greater number of managers with pan-European platforms.

The IPD’s pan-European Property Fund index shows heavy exposure to CEE, with 12% CV of direct property. This reflected a view echoed by other speakers, that Poland had become a significant market. Speakers on the panel commented that the European market was becoming more intergrated, with investors from London increasingly diversifying their portfolio across Europe rather than in the UK outside London. The index’s greatest exposure is to France and Germany, comprising nearly half its exposure between them.

 

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