Outflows from property funds slow as real estate provides a ‘safe-haven’

By Bridging Loan Directory 5th March 2020

Property funds enjoyed their best, or rather least-worst, month since September 2018, according to the latest fund flow index from global funds network Calastone.

Net outflows of capital dropped to just £18m, down from £80 million in January and £342 million in December. The Calastone FFI: Real Estate rose to 48 in February, only a little below the neutral 50 mark where buys equal sells.

February’s reduction in outflows was caused mainly by an increase in buying activity; selling activity remained close to the 16-month low experienced in January. Total trading activity rose by almost a quarter as a result.

Most notably, sentiment turned more positive in the last week of February as global markets were convulsed by panic over the likely impact of the coronavirus on the world economy. In the last five trading days of the month, investors bought a net £24.6 million of real-estate funds.

Despite the improvement, February nevertheless represented the seventeenth consecutive month of outflows, taking the total shed by the sector to £2.9 billion over that period. This means that approximately £1 in every £12 has left the sector in the last year-and-a-half.