The FTSE EPRA/Nareit Global Real Estate Index Series outperformed broader markets in April as geopolitical and macroeconomic headwinds weighed on financial markets. The FTSE EPRA/Nareit Developed index posted a total return of -5.4% for the month and -9.0% year-to-date, while the Global index, which includes both Developed and Emerging Markets, returned -5.2% and -8.4% over these respective periods. The FTSE EPRA/Nareit Extended Index Series, which broadens the investable global real estate market to include cell towers and timberland, returned -4.8% in April and -9.2% year-to-date.
Global real estate traded flat for most of April before succumbing to the pressures of earnings misses from some of the largest companies in the world amid investor expectations that the U.S. Federal Reserve has embarked on a protracted period of monetary-policy tightening and inflationary pressures driven by supply chain woes will continue longer than previously forecast. The total return on the FTSE EPRA/Nareit Developed index was -1.1% through April 22 before falling -4.3% in the final week.
Regionally within the Developed series, Asia posted the strongest returns in April, with a total return of -4.4%, followed by North America at -4.6% and EMEA at -10.3%. Year-to-date, these regions posted returns of -5.3%, -8.3%, and -16.7%, respectively.
In the Developed Extended index, two property sectors were positive for the month, with returns of 7.8% for timber and 1.2% for lodging/resorts. Industrial/office mixed lagged with a return of -10.4%, followed by office at -9.3%, and health care at -7.8%. While the lodging/resorts sector continues to rebound as travel resumes, returns by region have presented markedly different stories.
The lodging sector continues to improve from the downturn caused by the COVID-19 pandemic, with a total return of -1.0% since the beginning of the pandemic on Feb. 21, 2020. This rebound has been led by the U.S. lodging sector, which has posted a total return of 4.2% over this period, while Developed Asia and Developed Europe have returned -19.6% and -38.9% over the same period, respectively.
Broader markets were hit harder than real estate around the world in April, with total returns on the FTSE Global All Cap, Dow Jones U.S. Total Stock Market, and MSCI EAFE of -7.9%, -9.0%, and -6.4%, respectively. Year-to-date, the FTSE Global All Cap is down 12.7%, the U.S. Total Stock Market is down 13.9%, and the MSCI EAFE is down 11.8%. Since Russia invaded Ukraine on Feb. 23, the FTSE Global All Cap is down 4.2%, the U.S. Total Stock Market is down 2.4%, and the MSCI EAFE is down 6.5%. Over this same period, the Developed index is up 0.3% while the Developed Extended index is up 1.8%.