In another indication of the increasing demand for property derivative products, hedge fund ORN Capital will soon launch the world’s first p...

In another indication of the increasing demand for property derivative products, hedge fund ORN Capital will soon launch the world’s first property derivatives fund targeted, initially at least, at institutional investors. ORN, which is backed by Morley Fund Management, is understood to have hired two managers for the fund, which will use derivatives to go long on favoured markets and short on others. The fund caters for demand from investors who want exposure to property markets without actually trading physical property. UK-based fund manager Sarasin Chiswell has already launched a UCITS III global real estate fund which take advantage of derivatives whilst investing in real estate investment trusts across the world. Research house the Investment Property Databank puts the total value of trading in UK property derivatives at £3.7 billion at the end of the third quarter of 2006, compared with £1.7 for the first quarter. While institutions are the initial targets of the funds, the products are expected soon to become common in the private client area.