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LONDON-Institutional investors ploughed an extra £1.1 billion ($1.55 billion) into UK real estate during the first quarter of 2001, according to new data from the Office of National Statistics. But this shows a fall from the £6.1 billion ($8.6 billion) of new money invested during the same quarter of 2000, implying that the funds’ appetite for property is waning.

But according to Elliot Glausiusz, head of investment strategy at DTZ Debenham Tie Leung, property remains a target sector, with institutions attracted by the stable and relatively high returns obtainable on property investment. And he pointed out that while purchases may be down on last year, the value of sales by institutions remains at a low level.

The sharp falls in equity values during February and March 2001 left many funds apparently overweight in property, and this is causing some to reconsider their asset allocations, according to DTZ.

‘In our view, current pricing offers an opportunity for institutions to access a high yielding sector with scope for further relative outperformance. Stock selection will assume greater importance in the short term given yield convergence between sectors,’ says Glausiusz.

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