Webinar Summary: Drivers of UK Real Estate Fund Performance

Real Estate:UK recently hosted a webinar exploring the findings of a major new research report examining the performance of UK real estate funds between 2011 and 2025. This report was funded by the IPF Research Programme. Presented by Professor Sotiris Tsolacos and Dr Elisabetta Pellini of Bayes Business School, the research provides valuable insight into the factors that have shaped fund returns during a period marked by Brexit, the COVID-19 pandemic, rising inflation and significant interest rate changes. 

The study found that UK real estate funds delivered resilient long-term returns despite a challenging economic backdrop. Risk-adjusted performance compared favourably with other asset classes, while downside risk remained relatively low for investors with longer holding periods. 

The research also highlighted how the fund market has evolved over the past 15 years, with fewer but larger funds operating today, alongside the emergence of long-income strategies and sustained net outflows from the sector in recent years. Potential factors behind these outflows include higher interest rates, increased competition from fixed income investments and investor demand for greater liquidity and flexibility. 

Using detailed fund-level analysis, the researchers identified several key drivers of performance. Momentum in fund growth was found to be one of the strongest predictors of future returns, while economic conditions, particularly GDP growth, also played an important role for certain fund types. The impact of factors such as tenant concentration, development exposure and net reversionary yield varied across different fund categories, demonstrating that there is no single formula for success. 

One of the most significant findings was that a meaningful proportion of fund performance could not be explained by observable market or fund characteristics alone. The research suggests that manager expertise, investment processes and asset management decisions continue to have a significant influence on outcomes. 

The report concludes by identifying several areas for future research, including the drivers of capital flows into and out of real estate funds, improvements in industry data quality, and a deeper understanding of how fund managers create value over time. 

The report will be available on the website at the end of June 2026