AREF: UK unlisted pooled property funds raise £4.8b in 2010

UK unlisted pooled property funds (PPFs) raised £4.8 bn (EUR 5.5 bn) of new money in 2010, the highest figure since 2006, the Association of Real Estate Funds (AREF)'s Investment Quarterly revealed last week.

Net asset value rose by almost a quarter (24%) year-on-year to £31.4 bn at year-end 2010, although still well below the peak of £42.2 bn reported in June 2007. Net outflows amounted to £2.9 bn in 2010, below 2009's figure of £3.2 bn.

In the fourth quarter of 2010, cashflow remained net positive, with £687 mln of new money being generated, compared to £752 mln in the third quarter of the year. The All-pooled property fund index saw a positive total return of 2.7% in Q4 2010 or 14.8% for the full year 2010.

The weighted average PPF yield was 4.0% in Q4 2010, down from 4.9% in Q4 2009.

'Our figures indicate further moderation in new investment. The flow of new money into the industry has slowed but remains positive, reflecting investors' continued interest in the income characteristics of the asset class,' said John Cartwright, AREF's Chief Executive. 'The general uncertainty in the economy appears to be driving different behaviours by investors. Some have moved money elsewhere as funds are able to support redemptions, while other investors remain in property for its consistent income return.'