IMA figures show that net retail sales of property funds fell off a cliff last year, but Oakeshott, who now plies his trade as a portfolio manager at OLIM Investment Managers, thinks this "knee-jerk" reaction could come back to haunt investors.
"I have never known a buying opportunity like it," he said. "There’s plenty of value in the market right now, if you know where to look."
"The only way to be successful in investment is to buy from the frightened and sell to the greedy, and now there are lots of frightened people so it’s time to do the buying."
Henrie Westlake, head of regional investment at estate agent Knight Frank, said: "People are not doing their homework. We are buying a B&Q in East Kilbride at 7 per cent and selling an identical one in Southampton at 6 per cent."
Westlake says the best bargains are to be found in regions where few investors are carrying out the necessary research.
Although property was hit hard by the crash of 2008, data from FE Analytics shows eight out of the 17 UK-focused funds in the IMA Property sector have returned more than 25 per cent in the past three years.
FE four crown-rated Aberdeen Property Share is the leader with returns of 45.79 per cent, while Ignis Property has gained 34.14 per cent.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
In a recent interview with FE Trustnet, star manager Martin Gray said he was beginning to turn his attention to UK property; however, he claimed that prime markets offer the best value.
In contrast, Lord Oakeshott believes that even though London property prices had held up better than the rest of the country, the market is too volatile.
The manager says he focuses on smaller towns and cities in the region, where detailed investigation shows great variation in potential in seemingly similar sites.
He added that 80 to 90 per cent of his purchases were from the receivers or situations in which they were about to be called in, with many sales coming from troubled Irish and Scottish banks.
AWD Chase de Vere’s Patrick Connolly, however, remains unconvinced on the sector.
"I think it’s a bit misleading to say there’s a lot of potential there," he said.
"Although I do agree with the premise that it’s good to invest in things when the price is down I don’t agree the prices are very cheap and we are not over-optimistic for the next few years."
Connolly says AWD Chase de Vere typically invests around 10 per cent of a portfolio in property.
"I think over the long-term it has the potential to perform well and it does provide an income stream, although that isn’t in itself enough reason to buy," he explained.
"The London market and the south east are different to the rest of the UK and it is overseas buyers that are supporting that market."
"So when we invest, our focus is on capital protection more than growth and we argue London and the south east offer the best opportunities."