UK Property Funds Continue Their Long, Slow Death

Investors pulled nearly £1.2B out of UK property funds in 2024, marking the sixth consecutive year of outflows that have seen almost £7B leave the sector. 

Open-ended funds — funds that allow investors to put money in or take it out at short notice — haven’t seen a year of net inflows since 2018, according to data from global funds network Calastone. 

Even before the pandemic, investors were pulling cash out of property funds of this type. The trend continued as a result of lockdowns and rising interest rates. 

These funds have since been forced to sell assets to repay investors who want their money back, in many cases liquidating portfolios wholesale and closing down. 

The £849M Lothbury Property Trust and the £565M M&G Property Portfolio are in the process of selling off their portfolios, undertaking piecemeal sales. In March 2022, hedge fund Elliott Management bought the entire £940M portfolio of the Janus Henderson UK Property PAIF, which was managed by Nuveen. 

The £1.15B of outflows from UK property funds in 2024 is a 15% increase on 2023's £1B outflow. The last quarter of the year saw the highest total of withdrawals, about £422M. 

The increase happened not because more people wanted to sell out of property funds than in an average year but because fewer people wanted to buy in, Calastone said. Buy orders of £1.77B in 2024 were less than half their 2015-2022 average, falling 16.2% year-on-year. But sell orders fell just 6.5%.

Outflows peaked at £1.74B in 2021. In 2015, the year before the Brexit vote, property funds saw inflows of £2B. 

“For the UK property sector, attracting buyers has become increasingly difficult,” Calastone Head of Global Markets Edward Glyn said. “The choice of funds available has fallen, restrictions on liquidity deter those who might want access to their cash, and the macroeconomic picture is challenging — high interest rates in particular reduce the attractiveness of property. Unfortunately, 2025 offers little in the way of hope for inflows into property funds.”