Property funds have had a “bad start” to 2023, according to the latest figures from Calastone.

Investors sold a net £48.3m of their holdings in January, the sixth consecutive month of outflows. Funds have been flowing out since mid 2018, apart from a brief flurry of buying in 2020.

More unusually, the value of buy orders actually rose in January to £98m, its highest level since August, but this was cancelled out by a rise in selling pressure to £146m.

Calastone head of global markets Edward Glyn said: “There is no end in sight for property fund outflows for the time being, despite the limits placed on redemptions.”

Interest rate rises and the threat of recession were driving the decisions, he said. Even though Thursday’s rate rise to 4% is thought to be at least near the peak, “outright cuts are some way beyond the horizon yet”.

Glyn said: “It’s hard to see a decisive turn of sentiment until they begin.”

Calastone’s figures come as a number of funds seek to limit redemptions, including those run by KKR and Blackstone.

“The imposition of restrictions on redemptions is entirely sensible in the short to medium term as this aligns the structure of property funds with the liquidity profile of the underlying investment,” Glyn said. “But investors do not like these limits and this may damage the sector longer term.”

What was needed, he said, was a rethink of how investors treat real estate. He added: “There’s no easy option. Those who opt for closed-ended investment trusts may be sure of liquidity but this comes at the cost of big discounts to asset value in bad times.”

“The real answer, of course, is that investors should treat property as a long-term investment that they hold throughout the economic cycle, rather than attempting to titrate their exposure with every drop of economic news.”