UK investors withdrew £51m from property funds in January, lower than the £60m average for the past 12 months, according to the latest Fund Flow Index from Calastone.

The improvement was mainly driven by a reduction in sell orders to £161m in January, compared to the £182m 2025 monthly average. However, the month’s £8m of buy orders was also below the 2025 average.

Edward Glyn, head of global markets at Calastone, said one of the main forces driving the fortunes of property funds is the long-term shift away from the open-ended funds, which have struggled with liquidity issues during times of market stress.

Glyn also noted that London Stock Exchange-listed property stocks had a “very good” January, with the FTSE 350 REITS index rising 6.7% during the month, although prices are still well below the most recent market peak at the end of 2021.

Glyn said: “This was partly driven by consolidation, which is less relevant to the open-ended sector, but also reflects improving conditions in the market: falling interest rates, stabilising property valuations and strong demand in sectors like logistics and student accommodation.

“The read-across for open-ended funds is clear: if the cycle turns decisively upwards, selling pressure should diminish further.”

Last month, Calastone found that December property fund outflows fell to their lowest level since August as investors withdrew a net £35m from their property fund holdings.

Calastone noted that although January’s figure marked an increase month-on-month, December was a quiet month across the board, largely for seasonal reasons.