Real estate funds enjoyed a month of relative respite in January, with outflows sinking to their lowest level since May 2019, according to new research by Calastone.
While outflows did continue, at £78.1m they were well below the average monthly redemption rate of £178.8m since flows turned negative back in October 2015. In December, £328.6m left the sector.
Despite this, January represented a record 16th consecutive month of outflows. In total, the amount of capital withdrawn from property funds since October 2018 has now reached £2.9bn. In those 16 months, investors have taken out £1 in every £12 they had invested in property funds.
January’s improvement in the net outflow was driven by a steep reduction in selling, rather than an increase in buying activity. The value of redemptions fell by two-thirds in the month.
Edward Glyn, head of global markets at Calastone, said: “The real and present danger of contagion across the whole property fund sector seems to have been contained, but it is not out of the woods yet. From a cash-flow perspective, sharply lower redemptions give fund managers valuable breathing space to rejig the portfolio and rebuild liquidity buffers, but a buyers’ strike leaves the sector vulnerable to any further negative news flow in the short term.”
Glyn added that real estate remains “a fundamentally important asset class”, suggesting that investors shunning property “risk throwing the baby out with the bathwater”.
To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette
