Property fund outflows slowed sharply in June, falling to just £6.1m, marking the smallest monthly net outflow since May 2024, according to Calastone’s Fund Flow Index.

The index shows property funds have now experienced 25 consecutive months of net outflows. However, June’s figure represents a notable improvement from the £14.8m withdrawn in May and continues a broad trend of falling net outflows that began in October 2025.

The improvement reflects stronger buying activity rather than a reduction in selling, suggesting investors may be beginning to reassess the asset class.

According to Edward Glyn, head of global markets at Calastone, property funds have been under pressure since higher interest rates reduced the relative appeal of commercial real estate and increased financing costs across the sector.

However, he added that expectations that interest rates were moving lower, together with attractive property yields and signs of stabilisation in commercial real estate valuations, appeared to be encouraging buyers back into the market.

He said: “We’re not yet seeing a decisive turning point, but the trend over recent months points to a gradual rebuilding of confidence. Property remains capable of offering attractive income alongside diversification benefits, and that combination is likely to become increasingly appealing if policy and market interest rates do begin to move lower.”