The UK’s 63 pooled property funds raised just £167m in the first quarter of 2012 – the lowest quarterly figure for eight years.
According to the Association of Real Estate Funds, most of the money raised in Q1 – the lowest amount since Q3 2003 – came from new investors.
AREF chief executive John Cartwright said the trend, following an apparently strong recovery in late 2009 and early 2010, “has echoes of the double-dip recession in the wider economy”.
Despite the low level of money coming in, capital net flows remained positive at £106m as redemptions fell to just £61m – the lowest figure since Q4 2004.
The return to a positive influx follows two quarters when the balance of money was seeking an exit. The 63 pooled property funds delivered an average quarterly return of 0.7% in Q1, down from 1.2% in Q4 2011. This was the fifth consecutive reduction in the quarterly return rate since a peak of 2.7% in the final quarter of 2010.
AREF also found that balanced funds outperformed specialist funds for the third quarter running. This run by balanced funds comes after eight consecutive quarters of specialist funds outperforming.
