Real estate funds see highest quarterly outflows for more than a year

UK real estate funds suffered their highest level of quarterly outflows in more than a year over the start of 2024. Fund network Calastone tracked a net £210m of withdrawals over the first quarter, the worst performance since the final quarter of 2022, at £226m. In March, outflows stood at £61.8m, in line with the average over the past 12 months. Edward Glyn, head of global markets at Calastone, said: “Commercial property is in the doldrums as an asset class – a glance at the share prices of closed-ended REITS shows they are trading today no higher than they were 13 years ago. “High interest rates, concerns over economic growth and structural changes in demand for property have all taken their toll on valuations. But the open-ended sector has its own long-term challenge as investors increasingly turn away from a fund structure that is vulnerable to major disruption from fund flows. Investors have increasingly understood that illiquid assets [are] ill-suited to open-ended funds.”