UK – Returns on pooled property remain strong but there was a significant increase in the outflow of money from UK property funds in the second quarter of this year, according to figures from the Association of Real Estate Funds (AREF).
Inflows still outweigh money leaving unlisted property funds, according to AREF’s analysis of quarterly data from 63 member funds, as £1.1bn in new money was placed in funds in the three months to the end of June 2007 compared with the previous quarter.
That said, this is still a significant jump in the amount of money leaving funds, up from £324m to March 2007 to outflows of £631m by June, and the amount of money entering funds has reduced from £1.44bn, suggesting there is a slowdown in property interest but "is not seen as a sign that the popularity of unitised funds is waning".
Pooled property funds (PPFs), such as those invested on behalf of pension funds, presented returns beating the IPD quarterly index, property, equities and bonds of 13.6% year-on-year compared with property equity returns of 9.2%.
Nick Cooper, chairman of AREF, downplayed the reduced asset flow related to real estate and noted returns have eased in line with the wider investment market to reveal as "a gentle cyclical slowdown in the market" and "not one that was unpredictable".
He pointed to trends in the direct investment real estate market as indicative of developments in unlisted funds, as AREF noted "there has been a divergence between the outperforming Central London office market and the underperforming retail market in Q2", both of which still saw positive total returns on respective funds.
