UK financial services firm Arbuthnot Banking Group said it has launched a real estate fund management business, exploiting cheap valuations in property amid the recession, according to Reuters.

The new business is to be led by Richard Tanner, who will join Arbuthnot on 28 September from UBS, where he was previously managing director of UK Real Estate.

The rollout of the real estate fund may be a sign that investment firms and banks believe the real estate market, battered by the financial crisis, looks to offer strong value. In the UK, for example, commercial property prices have fallen 42 per cent from their peak in June 2007, as measured by the headline Investment Property Databank index. As a result, property yields, which were below government bond yields in 2007, now stand at a significant premium.