M&G Investments, Aviva Investors and Standard Life Investments have suspended trading in United Kingdom real estate funds in the latest market fallout from Britain’s vote to leave the European Union.
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M&G said withdrawals from its £4.4bn fund had risen markedly because of “high levels of uncertainty in the United Kingdom commercial property market” since the outcome of referendum.
Henderson said Wednesday that it had temporarily suspended all trading in its GBP3.9 billion ($5.08 billion) Henderson UK Property PAIF and its feeder fund “due to exceptional liquidity pressures”.
It follows similar decisions announced by SLI, Aviva and M&G earlier this week to cease trading on their respective funds due to an increase in redemption requests triggering share sales in property and asset management companies.
Analysts have said moves by investors to pull money out could put downward pressure on commercial property prices.
The association’s interim chief executive Guy Sears said: “Fixed Income funds were the most popular amongst United Kingdom investors in May as they looked to lower their risk exposure ahead of the European Union referendum”.
The announcements come as the new FCA boss Andrew Bailey warned the structure of open-ended property investment funds may need to be reconsidered.
“Clearly there has been a knee-jerk reaction to Brexit in the commercial property sector, which may moderate over time”.
Standard Life reported the suspension was requested to protect the interests of all investors in the fund.
Aberdeen said the UK Property fund was defensively positioned before the referendum.
“Some of the nation’s largest insurers and asset managers Tuesday moved to stop spooked investors pulling money out of their funds”, the article explained.
According to the Bank, such tradable funds now account for around 7 per cent of total investment in United Kingdom commercial property and have around £35bn under management.
“At this time it is still hard to predict the exact impact of the vote to leave and subsequent market events on commercial property values”, said a spokesperson. Sovereign wealth funds from Singapore and China coupled with institutional investors from Japan, Korea and Malaysia have all made substantial investments into British commercial property over recent years.
The last time Standard Life stopped investors taking money out of its United Kingdom real estate fund was during the financial crisis in late 2008.
Nearly 3 billion pounds has been wiped from the market value of the FTSE 350 Real Estate Investment Trust Index since trading started Monday.
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In a separate part of the property market, house builders have seen sharp share price falls in the wake of the poll result.
