The unlisted property vehicles market has experienced rapid growth in recent years. Whereas ten years ago the European unlisted property vehicles market constituted less then 50 vehicles, with an aggregated value of around €100bn, nowadays this market comprises 600 vehicles with a total gross asset value (GAV) of €275bn (see figures 1 and 2).
The Property Vehicles Databank (PVD), a joint venture between Investment Property Databank and Oxford Property Consultants, is committed to produce innovative research on European real estate vehicles, and is working together with INREV to promote transparency in the market of unlisted real estate vehicles. It has just released two publications, the Directory of UK Property Vehicles 2004 and the Directory of European Property Vehicles 2004.
Since the first publication of the directories in 2002, there has been an enormous increase in the coverage of vehicles (see figures 1 and 2). While there has long been a strong commitment to providing information in the UK, PVD has witnessed a drive towards greater transparency in continental Europe, with the universe of European funds covered by PVD increasing by almost 125% in the last year, as measured by GAV. There have been 10 new fund launches in the first three quarters of this year.
This year’s directory explores three key themes. The first is that, over time, investment style has become less conservative, as shown in figure 3. In the beginning of the 1990s, vehicles commonly adopted a core investment strategy. Since the mid-1990s however, vehicles started to became less conservative, with value-added vehicles in particular gaining market share. However, the proportion of opportunity funds has fallen slightly from its peak in 2001
Secondly, PVD has observed that, while capital is still flowing into the market, the pace of this investment is slowing down. In the period 1996-2000, the GAV of the market grew from €80bn in 1996 to €130bn in 2000, equating to an average annual growth of around €10bn. However in subsequent years growth has been slower.
The third headline trend identified in the Directory of European Property Vehicles 2004, is a projected spike in the maturity of unlisted property vehicles. In the period 2007-2010, funds with a total GAV of €28bn are scheduled to unwind. With the majority of these vehicles adopting an opportunistic or value-added style, it remains to be seen whether all of this money will stay within property, or whether it will flow into equities.
The 2004 PVD Directory of European Property Vehicles covers a universe of 175 unlisted real estate investment vehicles with a total gross asset value of €144.1bn, an increase of 90 vehicles and €80bn in the last year. This jump can largely be attributed to improved information on existing vehicles, as well as newly launched unlisted property vehicles.
The German open ended real estate funds once again dominate the universe by value with a total gross asset value of over €85bn. The second largest group of funds by value are the Swiss domiciled open ended funds, with €18bn of assets.
Diversified vehicles dominate the universe. However, if actual asset breakdowns are considered, the office sector represents 39% of the total gross asset value. The residential sector is the second largest sector accounting for 30% of gross asset value. Largely attributable to Swiss and Dutch vehicles.
Institutional investors hold almost 65% of the unlisted property vehicle shares in the Directory. Pension funds account for almost 50% of the institutional investors.
Léon Karens is vehicle analyst for PVD

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