Property fund outflows double

Outflows from property funds accelerated last month, according to the latest figures from Calastone, with a net £72m withdrawn from the sector. The volume is double the amount withdrawn in December and ahead of the average £57m monthly outflow over the past year and a half. Calastone said changes in the value of buy orders are typically the key driver of fund flows, but buying activity for property funds was already extremely suppressed. Buy orders totalled just £28m in January, a similar level to December and November. This is just one eighth of the average monthly value in the years running up to the pandemic, said Calastone. The acceleration of outflows in January came from a marked uptick in selling, with sell orders rising to £100m. Edward Glyn, head of global markets at Calastone, said: “Hopes of lower interest rates have driven an equity market rally and surging fund inflows. But property funds are missing out on the party. “Capital values in the commercial property market are still declining owing to oversupply and slack demand – and there is caution among tenants on the outlook for the economy. “On top of that, the structural problem facing the open-ended property funds industry means investors have increasingly lost faith in the value the open-ended structure offers. This is likely to act as a continued long-term drain on the sector.”