Unlisted property funds see strong inflows
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British unlisted pooled property funds (PPF) raised £3.2 billion of new money in the fourth quarter of last year, the highest since 1998.
In terms of net flows, PPFs recorded positive net fund flows of £2.9 billion, according to the investment quarterly published by the Association of Real Estate Funds (AREF). This is 6.5 times higher than what was recorded a quarter ago.
During the calendar year 2009, PPFs posted an annualised negative return. However, AREF says that the strong rebound in the last quarter narrowed the outcome to a loss of 5.4%. (article continues below)
In the first quarter of last year, the average fund saw an average fall of 36.4%.
“This marks the second quarter of positive net sales, signalling the resurgence in popularity for property funds”
John Cartwright
Yet returns of PPFs have improved when measured over a 10-year period. They are now slightly ahead of real estate equities and moreso against equities in general.
The weighted average yield on PPFs was 4.9%, lower than the 5% of the previous quarter.
John Cartwright, the chief executive of AREF, says the year marks record new money coming in to the funds. The final quarter also showed extraordinary growth in total returns, he adds.
“This marks the second quarter of positive net sales, signalling the resurgence in popularity for property funds,” he says in a statement.
“Interestingly, whilst retail investors remain extremely active, we have also seen significant new money from institutional investors who tend to have longer term investment horizons.”
AREF has 68 member funds that represent a net asset value of £25.2 billion.
