More than £800m was withdrawn from UK unlisted property funds in the first quarter as investors continued to sell out of a sector going through its hardest period for almost 20 years. Financial Times

However, there were the first signs that property funds have seen the worst of the backlash against the market, which had been the darling of the investment community on the back of several years of booming capital growth until it reached a peak last summer.

Redemptions of £818m were half that of the last quarter of 2007, although still more than 2% of the £35bn managed by pooled property funds, while some £330m of new money was raised during the first quarter.

The Association of Real Estate Funds said investor confidence in the sector was showing strong signs of recovery in spite of deteriorating credit conditions.

The data cover 63 funds representing £35bn of net assets, including the flagship retail unit trusts managed by the likes of New Star, Scottish Widows and Norwich Union, though mostly pension vehicles.