Non-listed property funds in Continental Europe saw capital growth in the last quarter for the first time since 2007. This is according to INREV, the European Association for Investors in Non-listed Real Estate vehicles.

According to the INREV Quarterly Index, Continental European non-listed funds achieved capital growth of 0.7% in the third quarter of 2010, resulting in a total return of 1.4%.

Capital growth was negative in INREV’s annual indices for 2008 and 2009, as well as in the first two quarters of 2010.

“The continued improvement of the Continental European non-listed fund market is a substantial indicator that capital growth and confidence is flowing back into Europe’s non-listed real estate funds,“ said Casper Hesp, senior research manager at INREV. “It is also interesting to note that there is a trend towards convergence where the difference in returns between the UK and Continental Europe decreases.”

INREV’s overall index, including the UK, showed a 1.7% return for the third quarter of the year, compared with 1.8% in Q2 and 2.4% in Q1.

The slowdown was caused by the slowdown in the UK market following a strong return to growth in the first half of the year.