Outflows from UK real estate funds slowed to £30m in February, marking a seventh consecutive month of withdrawals.
The sector has now seen only two months of net inflows since 2018, according to funds network Calastone.
The February figure was down from net outflows of £48m in January, driven by a drop of one-third in sell orders to £98m.
Edward Glyn, head of global markets at Calastone, said: “The third bear market rally in global markets petered out in February on the realisation that the interest-rate medicine prescribed to control inflation will be needed in higher doses and for longer.
“Property does have some inbuilt inflation protection over the longer term but in an economic downturn the immediate vulnerability to falling tenant demand and expensive void periods is more significant. Property prices are also sensitive to the sharply higher cost of capital facing the world today.”
Glyn added: “Investors who have sought out property for its yield in recent years now have more options to consider. Fixed-income yields are at their highest since before the global financial crisis and this is driving significant inflows to bond funds. Property is doubtless suffering as a result.”
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