UK retail investors’ property fund activity has soared by 900% following the Brexit referendum in July, compared with the same period a year earlier, with outflows outweighing inflows by around 12 fold, according to analysis carried out by Rplan, the UK-based online fund platform.
'Self-directed investors pulled out of property funds in droves following the Brexit, which would have played a role in driving down commercial property prices. But our data suggests that gating was actually quite effective - or rather, than things could have been much worse without the gating/pricing adjustments,' said Stuart Dyer, Rplan's chief investment officer.
Since the referendum, outflows have accounted for 92% of retail fund movement, with inflows accounting for just 8%, according to Rplan. The fund platform has not released exact figures, due to ‘commercial sensitivity’. However, the findings clearly show that the trend on the part of UK banks and retail investors to stockpile cash, which started pre-Brexit, is showing no sign of abating. Investor outflows from property funds via Rplan peaked in the third week following the UK’s vote to leave the EU (commencing 4 July 2016) but dropped sharply thereafter.
Retail investors have access to thousands of funds via Rplan’s online fund platform, which enables them to invest in a wide range of assets, including equity funds in the UK and the US.
Rplan’s findings mirror the latest data released by the Investment Property Databank, which shows that UK property values fell by 2.4% in July. In the first six months of the year, property values fell by 0.6% in the UK, according to MSCI’s IPD’s UK Monthly Property Index. The index tracks performance of 3,341 property investments across 48 portfolios, with a total capital value of £47 bn as of July 2016.
