Tricks and mortar

PROPERTY

The superior volatility of listed real estate equities markets is deceiving for investors

Over the first eight months to August 2010, European real estate equities markets have produced a 4.3% total return (flat on a price-only basis) outperforming the wider equity market (DJ STOXX Europe posting a 1.9% total return over the same period). However, this low single-digit performance masks an eventful period. We witnessed the return of hyper-volatility at levels reminiscent of 2008 post the collapse of Lehmans. Indeed, the 10-day volatility was around 8.5% on 24 March and reached a high of 56% a month later to finally descend to the current 10%. Such excessive surges in volat...