British mutual fund investors more than tripled the amount of money poured into real estate in the fourth quarter as record-low rates for savings accounts boosted the appeal of higher-yielding investments.
Savers put a net 1.39 billion pounds ($2.2 billion) in property mutual funds, up from 422 million pounds in the preceding three months, according to figures compiled by the Investment Management Association, a London-based industry group.
A 44 percent slide in U.K. property values in the two years ended in July revived investor appetite for income-producing investments such as real state that also offer some protection from inflation. The 1.81 billion pounds in total inflows to property funds in the second half followed more than a year of net withdrawals.
Money managers such as Aviva Investors, the unit of Aviva Plc that manages Britain’s largest real estate mutual fund, resumed purchases after being forced to sell buildings to meet fund redemptions. That helped double the value of U.K. commercial property deals in the fourth quarter from a year earlier to 9.7 billion pounds, according to Property Data.
Returns from property mutual funds that own buildings rose to 8.1 percent in the final three months, Investment Property Databank calculates, limiting the losses for the entire year to 3.5 percent.
Owners of commercial property got an annual return of 7 percent from rental income, December figures from IPD showed. That exceeds the 0.76 percent average return currently available from savings accounts, according to estimates on the personal finance Web site Moneyfacts.
Property funds jumped to No. 4 out of 34 in the rankings of the most popular vehicles for individual investors in 2009, the IMA’s report today showed. They were in second-to-last place in 2008, when net withdrawals, including sales to professional investors, totaled 1.16 billion pounds.
The 1.53 billion pounds invested in property vehicles last year represented 5.2 percent of the total money placed in U.K. mutual funds.
UK Capital Investments News, Feburary 2010
Friday, February 5, 2010
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