Outflows from UK property funds in July shrank to their lowest level since September last year, according to the latest Fund Flow Index from Calastone.
Investors redeemed a net £19m of their holdings, compared to average monthly selling of £54m over the past two years.
In the week following the general election, the net outflow shrank to just £65,000.
The improved position reflected less selling and more buying. Sell orders fell by almost one-third in July compared with the average over the past year, while buy orders were one-tenth larger than the average and, at £47m, were the highest since October.
Edward Glyn, head of global markets at Calastone, said: “One swallow doesn’t make a summer and we did still see outflows from property funds in July, but the improvement is consistent with the groundswell of positive commentary surrounding the investment case for UK assets.
“Growth indicators suggest the economy is outperforming its peers, while the arrival of a new government with a huge majority is in stark contrast to today’s political turmoil in many other major G7 countries and in the UK’s recent past. Last Thursday’s first cut in interest rates in four years also vindicated optimists who had begun to turn their attention back to their home market.”
He added: “The commercial property market faces structural challenges relating to changing patterns of occupancy and high finance costs, while the open-ended fund wrapper is increasingly unpopular with investors. But with the cyclical picture improving, it makes sense for investors to temper their pessimism.”
Image by Gerd Altmann/Pixabay
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