Institutional real estate investment returns fell slightly to 2.34 percent in the third quarter as they continue reverting toward the to-year average of 2.1 percent.
"Following the credit crises, capital market demand drove total returns higher over the last few years," said Mark Roberts, global head of research and strategy for RREEF Real Estate, Chicago. "With limited new construction in most property sectors and improving job growth, vacancy rates of assets in the National Council of Real Estate Investment Fiduciaries [NCREIF] index have peaked and fundamentals are now playing a greater role in driving real estate performance."
NCREIF's Property Index, which measures the return of a large pool of commercial real estate properties, saw a 1.42 percent income return and a 0.92 percent capital appreciation return in the quarter--a drop from the second quarter's 2.68 percent return and well below third-quarter 2011'S 3.30 percent return.
Roberts predicted that real estate will continue to perform close to its long-term trend "as long as economic growth remains stable and new supply remains in check."
The NCREIF Property Index has returned II percent over the past four quarters, split between 5.88 percent income and 4.91 percent appreciation.
Apartments returned to the top as the best-performing property type even though the 2.43 percent...