Demand for UK property funds surges on “buoyant” market

Demand for UK property funds surges on “buoyant” market

After some paused trading post-Brexit, demand for British property funds is now surging once more, with real estate presenting a “real opportunity”.

Summary:

  • New research shows rising investor demand for UK property funds
  • After several large funds paused trading following June’s vote for Brexit, concerns have eased as investors identify the “real opportunity” to invest in the country’s real estate sector
  • With a low-correlation to equities and a “buoyant” residential market underlining the current opportunity, more investors are looking to diversify their portfolios with funds

UK property funds are currently in huge demand, as investors identify the “real opportunity” of Britain’s residential property market.

The latest monthly report from research firm Cerulli Associates into European property funds showed that £434m flowed into the sector in January, just one month after £695m flowed out of the sector.

In the UK, several large funds suspended trading after last June’s EU referendum, with many investors concerned about the unprecedented nature of the Brexit vote and what it could mean for the future of Britain.

These firms have gradually lifted their suspensions, and now demand for British property funds is beginning to rise once again.

Peter Lowman, Chief Investment Officer at the Investment Quorum, explains to the FT Adviser that property funds are “always the first casualty during times of disarray”. But with property market performance underpinned by supply and demand fundamentals, rather than correlating closely to the state of equities and gilts, property funds will also continue to be a strong investment.

With one of the lowest levels of supply for a generation, residential property prices and rents in the UK continue to rise, driving returns for investors. Barbara Wall, Managing Director of Cerulli Associate’s Europe, described Britain’s residential property market as “buoyant”, and highlighted the huge investment opportunity for buyers.

She said: “With much of the market in residential funds dominated by unregulated funds and crowdfunding, for the smaller player, prepared to get down to the micro level, there is a real opportunity.”

Last week (March 14th), Select Property Group announced that heads of terms have been signed on a joint-venture with the Greater Manchester Property Venture Fund (GMPVF) to deliver a £247m private rented scheme at Circle Square in Manchester.

 

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