UK - Hermes Real Estate will "phase" new investments into its UK Property Unit Trust (HPUT) following an upturn in demand from corporate pension funds and local authorities.

Hermes said in a letter to existing investors: "Against a backdrop of growing investment interest in the property market, recent months have seen a significant increase in demand for new units in the trust, both from existing and prospective new investors.

"It is important that this demand for new units is balanced with the need to deliver performance for our continuing unitholders".

Speaking to IPE Real Estate, Chris Matthew, fund manager for HPUT, said new capital was to be phased into the fund over coming quarters, so he was not forced to invest cash in the market imminently.

Demand for UK real estate exposure has picked up, following a period of significant yield movements and with the International Property Databank (IPD) UK index finally showing positive returns.

But many fund managers are finding appropriate investment opportunities are limited because many owners are doing all they can to avoid selling at the bottom of the market.

HPUT was one of the few open-ended real estate funds in the UK to not have to resort to redemption freezes from the end of 2007, when investors across the board sought to draw liquidity from unit trusts.

"We've honoured all redemption requests. We've now got quite a lot of money wanting to come into the fund," said Matthew.

Threadneedle Property has also looked to halt new investments in its UK property unit trust for similar reasons.

It was thought the fund was close to its maximum cash weighting of 20%, but a spokesperson for the fund manager said the liquidity level in the fund is likely to vary as there were a number of deals in the pipeline.