Standard Life has been forced to stop retail investors selling out of one of the UK's largest property funds after rapid cash outflows were sparked by fears over falling real estate values in the week after the UK's vote to leave the EU.
The £2.9 billion commercial property fund will need to sell real estate to raise cash before any money can be redeemed. It is the UK's third largest open-ended property fund for retail investors.
The last property crash in the UK, just as the financial crisis started in 2007, was preceded by a wave of similar gatings by funds struggling to meet investor demands for cash. They led to firesales of property that added to the pressure on an already falling market.
Last week, Standard Life marked down the value of the buildings its funds own by 5 per cent in the wake of the Brexit vote. The UK's two largest open-ended property funds, run by Henderson and M&G Investments, did the same.
The move by the insurance giant to bar redemptions is one of the most concrete signs of the Brexit shock filtering from the financial markets into Britian's property sector. The impact could be wide-ranging since property has become one of the most popular choices for retail investors seeking yield in an era of low interest rates.