US real estate has delivered its third strongest annual returns of the last decade during 2010, at 14.2 per cent. Measured by the IPD US Annual Property Index, the result indicates a substantial turnaround in the market following 2009's dismal -18.9 per cent return.
The IPD index measures the performance of 46 mainly core funds worth USD 119 billion in annual return.
"This strong return was surprising given the magnitude of the distortion in the capital markets in 2008 and 2009," said Jim Valente, director of performance and risk analytics at IPD.
Breaking the results down further, the organisation noted that primary markets in coastal cities, as well as multi-family homes and retail sector are the favorites for fund managers.
Indeed, the retail sector outperformed the national average by 70 basis points at 14.9 per cent, driven by strong performance among large regional malls. The office sector delivered a total return of 12.6 per cent, although performance varied across regions, with New York City and Washington DC leading the way with returns of 21.4 per cent and 19.6 per cent, respectively.