In an attempt to capitalise on the keen interest in the property market, Norwich Union has introduced two new property funds aimed at the average investor.

"Many investors are keen to invest in property but the high entry costs of individual direct investments are prohibitive," said Mr Grant Barrans, managing director, Life & Pensions.

Investors may purchase units in either the Norwich Union Irish Property Fund or the UK Property Fund for a minimum investment of £5,000. An investment of £10,000 or more is required where a regular withdrawal amount is needed.

Norwich Union believes the outlook for the property market and economic fundamentals in both states remain strong.

The company predicts capital growth in Irish commercial property over 1999 to be about 20 per cent, while rental value growth is expected to increase by about 10 per cent in 1999. Over the next three to five years the projected average total returns are 15 per cent per annum.

In the UK investment and property markets, a total return of 12.3 per cent per annum is forecast between 1999-2001.

Risks include over-development of the property market in Ireland and a rise in stamp duty in the UK.

Norwich Union's long established Irish and UK commercial property portfolios comprise the underlying assets of the funds. The portfolios are invested in high quality offices, high street retail properties, industrial properties and property shares.

During the first five years, there is a 1.5 per cent management charge which reduces to 0.75 of a per cent in the ensuing years. To encourage medium to long term investment, an early exit is penalised during the first five years. Withdrawal in year one incurs a 5 per cent surcharge, every year after that the penalty decreases by 1 per cent.

The new funds are part of Norwich Union's existing portfolio bond range. Other funds include international equities, an Irish equity fund, a managed fund, a fixed fund and a cash fund. All funds have a management charge of 1 per cent per annum, a limited administration charge of 0.5 per cent per annum during the first five years and no bid/offer spread.

Once in a fund, switching is allowed between any of the portfolio funds six times a year without charge. Additional switches are charged at 1 per cent of the value of the money transferred subject to a minimum charge of £25.

A minimum of 10 per cent of the investment must be applied to each fund.