"Our survey shows that larger investors are enthusiastically embracing property derivatives," says IPF research director Charles Follows, "and they either have already entered into contracts or are likely to do so." The survey was timed to coincide with the launch of the IPF's Property Derivatives Interest Group, which aims to promote the use of the vehicle by investors.

The most commonly cited reason behind derivatives' growing popularity was the changing make-up of a property portfolio, followed by changing the weighting of property in a portfolio. IPF researchers believe that the survey shows that investors want the market to evolve from contracts on the Investment Property Databank all-property index to those based on IPD sector-specific contracts, enabling tactical asset management. "In five to 10 years, derivatives trading will be a very significant part of the market," says Follows.

Nearly three-quarters of respondents had the authority to use property derivatives. Of those that did not yet have the authority, most were taking steps to obtain it.

The survey was sent to 100 key players. Respondents represented more than euro 104 billion of investment, over half of the UK market.