UK property shares fell sharply yesterday amid growing uncertainty following the EU referendum vote and the suspension of trading in three major commercial property funds. 

M&G Investments and Aviva yesterday became the latest UK property funds to halt redemptions following the news that Standard Life had suspended a £2.9bn commercial property fund on Monday, adding to heightened uncertainty among investors. 

Aviva Investments on Tuesday said it had prevented retail investors from selling out of its £1.8bn UK Property Trust since Monday afternoon, while M&G closed the doors on its £4.4bn fund. 

“Extraordinary market circumstances” have been blamed for the need for immediate liquidity in funds. 

“Suspension of dealing will give Aviva Investors greater control in managing cash flows and conducting orderly asset sales in order to meet our obligations to investors,” Aviva said in a statement. 

Many investors are getting increasingly nervous now because they fear that Standard Life, Aviva and M&G Investments may not be the only funds to close their doors, and that their forced selling of buildings could act as the catalyst for a sharp decline in commercial property prices, as happened during the 2008 financial crisis.

Laith Khalaf, an analyst at stockbrokers Hargreaves Lansdown, said: “The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote.

“It’s probably only a matter of time before we see other funds follow suit.”

Bill Oliver, chief executive of St. Modwen Properties, said that recent events in the market reflect the fact that “we are now operating in a period of uncertainty in relation to many factors that impact the property market”. 

Shares in Legal & General fell by 5.6% yesterday, Aberdeen Asset Management shares were down 6.1% and Standard Life lost 3.5%. Land Securities, the UK’s largest property company, dropped 4.3%.