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US property returns fall to 7-year low

The core US property market has produced its lowest annualised return since 2009, fresh data from the National Council of Real Estate Investment Fiduciaries (NCREIF) shows.

The NCREIF Open-end Diversified Core Equity (ODCE) index, which tracks $174bn (£141bn) of property assets, posted an annualised return of 8.77% for 2016.

The figures suggest that that US property returns have flattened out following several years of strong capital appreciation.

Quarterly capital growth remained firm at just over 2% throughout 2016, down from around 3.5% during the previous year. Quarterly income returns remained stable during 2015 and 2016, at just above 1%.

ODCE funds, of which there are 24, attracted just $884m (£714.5bn) of net inflows in 2016, far below the $5-6.5bn (£4-£5.3bn) annual trend of the previous two years.

Net inflows turned negative in the final quarter of last year, as distributions and redemptions (£3.6bn) outgrew contributions (£3.2bn).

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