Property companies have been in the most successful indirect property vehicle in the UK, with the features of liquidity, divisibility, and low entry and exit costs contributing to this propularity amongst UK investors. However, this raises a number of key property investment issues, including: is indirect property an effective investment proxy for direct property? is indirect property a property market or stockmarket investment? These issues have attracted considerble attention in recent years amongst property investors, as well as generating considerable property research interest in UK, USA, Australia, Singapore and Hong Kong. In many countries, property companies have undergone major structural changes in recent years (Liang and McIntosh 1998; Newell et al, 1999). This has refocused institutional investor attention on whether the investment dynamics and characteristics of property companies have also chnged; with the property industry "expectation" being that property companies have now taken on more of the investment features of direct property. In particular, the key strategic institutional investment issue of how much of property company performance is attributable to direct property performance has received renewed attention. Effective resolution of this key issue will be a fuller understanding of the role of property companies, the effective packaging of property companies, corporate restructuring, and property acquisition and disposal streategies (Corgel et al, 1995). Given these international trends, it is essential that the recent investment dynamics of UK property companies are critically evaluated. As such, the objectives of this research are: to examine the investment dynamics of UK property company performance over 1988-99 to determine how much of UK property company performance is attributable to direct property performance to extract a more responsive direct property performance series from UK property company performance data to validate the above direct property series against the available valuation-based UK direct property benchmarks to critically evaluate the strategic institutional investment dicision-making implications regarding the changing level of direct property performance achievable by investing in UK property companies

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