The FTSE EPRA/NAREIT Global Index returned 10.9% (EUR), outperforming the FTSE All World Index (measuring the global equity market) which returned 9.6% (EUR) over the same period. The US dollar’s strength, however, meant that those index returns for dollar-based market participants were considerably more muted, but still outpaced the FTSE All World Index.
It was the developed countries—comprising 90% of the global listed real estate market—which contributed most positively to real estate performance, as the FTSE EPRA/NAREIT Developed Index posted a 2015 return of 11.5% (EUR) versus 6.1% (EUR) for the Emerging Markets index. Drilling down into the regional sub-indexes, we note that Europe—17% of the Developed Market—led the pack of developed regions with a return of 18.8% (EUR). North America produced a 13.4 % (EUR) return, with the majority of that return coming from US markets which clocked in at 14.8 % (EUR). Developed Asian real estate markets came in third among regional developed markets with a return of 3.3% (EUR).
Source: FTSE EPRA/NAREIT Monthly Statistical Bulletin December 31, 2015. Past performance is no guarantee of future results. Please see the final disclaimer for important legal disclosures.
Currency fluctuations can and do impact investment outcomes, however, and that was true in 2015 for the US investor. The US dollar strengthened against most major currencies last year: the FTSE EPRA/NAREIT Global Index fell 0.4% in USD terms, although this is a better result than for the FTSE All World Index which declined 1.7% (USD). Even so, developed European public real estate ended 2015 at a higher level despite the currency drag: a 6.7% (USD) improvement over the year. The domestic US listed real estate market also contributed a 3% return for the year, which compares favorably to the relatively flat performance of 0.5% for the domestic US equity market as represented by the Russell 3000 Index.
Source: FTSE EPRA/NAREIT, data as of December 31, 2015. Past performance is no guarantee of future results. Please see the final disclaimer for important legal disclosures.
Turning our attention to the country indexes, within developed Europe—the highest performing regional market in 2015 for both Euro and USD-based investors—Spain, Sweden and Italy produced the largest increase over the 2015 calendar year, and Norway suffered the most, falling 20% USD and 11.3% EUR. The weaker performance of developed Asia public real estate markets is explained primarily by Japan which fell 5.9% in USD terms. In the emerging world, China’s strong return of 13.5% (USD) could not offset the huge decreases in countries such as Brazil (-50.4% USD), Egypt (-44.4% USD) and South Africa (-22% USD).
Academic as well as practitioners have found evidence that listed real estate can provide diversification benefits to a multi-asset investor. In 2015, analysis of the performance of the FTSE EPRA/NAREIT Index Series suggests that Euro-based equity investors would have experienced improved total portfolio performance had they included exposure to public real estate markets. While the increasing purchasing power of the US Dollar diminished the overall level of returns for the US-based investor, outcomes from developed Europe as well as domestic US listed real estate support a role for real estate as a valuable diversifying asset class.
 Throughout this report we use FTSE EPRA/NAREIT Indexes to measure and represent global listed real estate markets.
 See, for example, Moss, A., and A. Baum (2013), “The use of listed real estate securities in asset management: a literature review and summary of current practical applications,” EPRA Research, European Public Real Estate Association.
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