Data from global funds transaction network Calastone shows that real estate funds suffered a seventh consecutive month of outflows from UK investors in April, although the pace of selling slowed markedly.
London-headquartered Calastone has analysed over a million buy and sell orders every month since January 2015, tracking monies from IFAs, platforms and institutions as they flow into and out of investment funds.
The real estate funds monitored for the latest report are located both in the UK and offshore - in Ireland and Luxembourg - though the fund flow index deals specifically with UK investors and UK money.
On every day of the month bar four, investors pulled money out of property, contributing to the longest period of sustained selling on record for the index.
The seven months of divestments takes the total value of capital withdrawn since October to £1.2 bn (€1.3 bn), Calastone noted, comfortably exceeded the £1.1 bn that left the sector in the year following the Brexit referendum in 2016.
Sales slowing
Calastone did note, however, that the pace of redemptions in the real estate sector was slowing considerably.
'With Brexit heaved to the back burner again and expectations of rising global interest rates dissipating, investors had less immediate impulse to continue shedding their property holdings in April,' said Edward Glyn, Calastone’s head of global markets.
'It’s too early to call a turn in the market, as uncertainty levels remain very high in the UK. Moreover, daily trading activity shows that negative sentiment is persistent, rather than overall outflows being driven by one or two bad days, or big decisions by a small number of investors,' Glyn added.
In April, investors withdrew £66.1 mln, the lowest outflows since October 2018, and sharply down from over £300 mln in each of December and January.
'Even so, outflows are coming down to more manageable levels. That will come as a relief to property fund managers who have faced both pressure to sell buildings to meet the demand for cash from investors, and increased scrutiny from regulators concerned about the level of selling activity,' Glyn noted.
The real estate fund flow index rose to 44.4, its highest level since September, though it remains below 50, the point at which redemptions equal subscriptions.
More than two thirds of UK fund flows are handled by the firm, which in total processes over £170 bn of transactions each month from 41 countries.
