Property fund outflows slowed by 86 per cent in April as optimism increased, says Calastone

Property fund managers heaved a sigh of relief in April as outflows slowed by 86 per cent month-on-month. At -GBP81 million they were the lowest since September 2020, and a significant improvement from the record drop of -GBP576m in March. 

Calastone’s FFI: Real Estate rose to 37.6, it’s best reading since July 2020 because it indicated a healthier balance between buying and selling than in September, even though slightly more capital left the sector.

The reduction in net outflows was driven by a reduction in selling activity rather than an increase in buying. The gross value of purchases over the last three months has been relatively stable. By contrast, sell orders have shrunk by half compared to February and by more than two-thirds compared to March.

Despite the improvement, April marked the 31st consecutive month of outflows from property funds, a period which has seen GBP5.1 billion leave the sector, equivalent to approximately GBP1 in every GBP8 under management.

Edward Glyn, head of global markets at Calastone, says: “April was a big month for fund flows overall. Across all asset classes in total, inflows reached a record GBP6.1bn, with investors showing a particular enthusiasm for equity funds. Against this backdrop of greater bullishness, less negative sentiment towards property makes sense. Investors are looking to the post-pandemic boom that seems increasingly likely to take off in a synchronised fashion across the developed world. 

"But it’s too soon to call a trend of improvement for property funds, as the post-pandemic shape of the industry is still being drawn. Record selling of property funds in March may simply have been an early shake out of those sellers wanting to crystallise capital losses before the end of the tax year.”