What is also true, however, is that these IMA sectorised funds are all more volatile than UK property indices.
Property funds with China exposure vs IPD UK All Property index over 1-yr
Source: Financial Express Analytics
Yet against UK equities, for example, this is less so. And arguably if the Chinese yuan is allowed to appreciate, it will do so against all major currencies, not just the dollar, which would put further perspective on the returns being reported in sterling terms.
Ranked by annual volatility over 3-yrs
| Index | Ann.Volatility |
| IPD UK All Property TR in GB | 7.36 |
| Finex UK Property Proxy TR in GB | 7.89 |
| FTSE All Share TR in GB | 18.93 |
| Stan Life Inv Select Property TR in GB | 19.59 |
| First State Asian Property Securities TR in GB | 26.16 |
| JPM Global Property Securities TR in GB | 28.14 |
| Fidelity Global Property TR in GB | 29.25 |
| Stan Life Inv Global REIT TR in GB | 29.92 |
Source: Financial Express Analytics
On a risk/reward basis, over one year to the end of February 2010, the data suggests the Fidelity Global Property fund would have returned 72.9 per cent against risk of 25.8 per cent.
The lowest return came from the Standard Life Investments Select Property fund, but against half the volatility of the Fidelity fund - a return of 31.4 per cent against risk of 12.7 per cent.
Contrast that against the IPD UK All Property index performance of 11.1 per cent against risk of 6.5 per cent. In other words, for those willing to go beyond the UK in this instance, there was a considerable spread of risk and reward options to consider.
But, that volatility still nags. The most recent market figures published by the National Bureau of Statistics of China certainly give support to those who view the local property market as verging on a retreat.
In a note published on 11 March the Bureau said that the total investment in real estate development in the first two months of 2010 hit 314.4bn yuan (roughly £30.6bn as at foreign exchange rates on 15 March), up 31.1 per cent year on year, and up 30.1 per cent on the same period last year.
Investment in commercial residential buildings hit 22.3bn yuan (£2.2bn), representing a 32.8 per cent year on year increase, or up 32 per cent on the same period last year.
Floor space jumped 29.3 per cent year on year. The level of new start housing floor space jumped 37.5 per cent.
Year on year sales of office buildings and buildings for commercial uses jumped 73.8 per cent and 63.3 per cent respectively, the government figures suggest.
Andrew Jackson, manager of the Standard Life Investments Global REIT fund says the concerns over supply are warranted as a possible cause of short term retreat in the local residential and commercial property markets.
“We are cautious on China for two reasons” he says.
“Our Hong Kong based analyst recently wrote a note on the amount of supply sitting vacant. And policy tightening is expected.”
The fund has some limited exposure to both residential and commercial property, but currently that has slipped to less than 1 per cent, Jackson says.
He does not, however, fall into the camp of those who expect a Western style property bubble to burst. For example, while there may be affordability questions over residential property, the fact is the economy continues to grow, feeding through to improved levels of wealth, while demand in cities is kept up by literally millions of people looking to move in.
Factors such as this mean that the gap between demand and output of supply should close more quickly than in the West, Jackson says. The concerns are about short term growth rates being impacted by this gap, not a spectacular market collapse.
“It doesn’t mean we don’t believe in the long term [property] story,” Jackson says.
Performance of MSCI China vs MSCI UK over 3-yrs
Source: Financial Express Analytics