Pooled property funds raised GBP3.2bn of new money in quarter four 2009, the highest on record since 1998 and dwarfing the peak of GBP1.7bn reached during the previous upturn in 2006, according to the Association of Real Estate Funds.

In terms of net flows pooled property funds continued to record positive net fund flows of GBP2.9bn in Q4 2009 - 6.5 times higher than the GBP0.4bn witnessed a quarter ago.

On a three-month basis, the all-pooled fund index saw a strong positive total return of 10.4 per cent in Q4 2009, above equities which saw a marked slowdown, albeit still growing positively.

During the calendar year 2009, pooled property funds delivered an annualised negative return, but the strong rebound in Q4 narrowed the loss to -5.4 per cent year on year from the low of -36.4 per cent year on year as at Q1 2009. 

Over ten years, pooled property funds again show an improvement in returns, slightly ahead of real estate equities and more so against equities generally.

The weighted average pooled property fund yield was 4.9 per cent in Q4 2009, down on the last quarter’s yield of 5.0 per cent and down on Q4 2008’s weighted yield of 5.7 per cent.

John Cartwright, Aref chief executive, says: “2009 was a volatile year, but it ended on a positive note with record new money coming in to the funds as well as the final quarter showing extraordinary growth in total returns. This marks the second quarter of positive net sales, signalling the resurgence in popularity for property funds. 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.”