Global property was the saving grace of fund manager New Star Asset Management in 2007, partly offsetting problems in its UK property business.

In its results for 2007, announced last week, New Star said that its International Property Fund, launched in June, experienced rapid inflows of investment, and had now grown to £661m. Figures from the Investment Management Association place it as the best-selling retail fund in the UK.

This is in stark contrast to its UK Property Unit Trust. A fall in the value of its property assets and outflows of cash resulted in a drop in value from more than £2bn in assets under management at the beginning of the year, to £1.5bn at the end of January.

The fund had a net inflow of cash of £379m in the first half of 2007, but outflows of £269m in the second half.

‘The main reason for this was that there was a significant deterioration in the UK commercial property market from the summer onwards as a result of previous interest rate rises and the impact of the global credit squeeze,’ New Star said.