US real estate has 鈥渃ooled鈥� to its slowest quarter in five years, according to MSCI.
The ratings agency said lower capital growth in the sector was a product of decreased activity.
MSCI recorded a total return of 2.03% in the first quarter of 2016 in its PREA/IPD US Quarterly Property Fund Index-All Funds.
The figure compares with a total return of 3.23% in the previous quarter and 3.22% recorded in the same quarter last year.
It is also the lowest total return recorded since 2010 for the index, which measured funds with a net asset value of $190bn (鈧�168bn) as of March.
Jim Valente, executive director at MSCI, said: 鈥淭he lower capital growth in the first quarter signals a timeout call by investors.鈥�
However, their enthusiasm for prime real estate 鈥� particularly in choice markets 鈥� shows no signs of cooling, he said.
鈥淚nvestors鈥� confidence in real estate has continued to gain this asset class greater allocation in investment portfolios,鈥� Valente said.
鈥淭he index continued to outperform other major asset classes in the long term and to expand its spread over government bonds.鈥�
While income return changed slightly compared with the previous quarter, a decreased capital-value growth contributed to the lower index return.
The index outperformed equities, bonds and property equities bonds on a one-year, three-year and five-year comparison, including across all the three measured levels 鈥� fund level and net fund, which are both leveraged, and Direct Property level, which is unleveraged.
