Property fund inflows halved in September as UK turmoil dampened investor confidence

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Buying activity in property funds halved in September as one crisis after another dampened investor confidence in both UK assets and the UK economy as a whole, according to the latest Fund Flow Index from Calastone. 

The value of gross buy orders fell to GBP72 million in September having registered its best monthly tallies since before the pandemic in both July and August. The value of sell orders also fell, but only by a quarter, meaning that net outflows totalled GBP90 million, slightly worse than the average for July and August. Property funds have now experienced outflows for 36 consecutive months.

Edward Glyn, head of global markets at Calastone, says: “We have watched a big shakeout of pent-up sellers from property funds over the last year, as investors previously trapped in suspended funds have taken the opportunity to withdraw their capital. As this group has exited the sector, we have seen the value of sell orders steadily decline for most of this year. 

"Unfortunately for fund managers and investors, the dismal news flow in September surrounding food, petrol and labour shortages, energy market disruption and surging inflation are all bad for economic growth, and therefore for the commercial property market. This put off the buyers who had tentatively begun to return to property of late, and drove more selling than was otherwise likely. Without all this bad news, selling activity would have slowed much faster in September and buying would have held firm, perhaps enough to have staunched the outflow from property funds altogether.” 

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