Access to over half the value of the £25 billion Investment Association property sector has been frozen, with Henderson, Columbia Threadneedle and Canada Life the latest firms to take measures to prevent investors from getting their money back.
The suspensions follow on from those instigated by M&G, Aviva and Standard Life earlier this week. All of the firms cited 'extraordinary market circumstances' which have hit the funds' liquidity.
Investors have rushed to sell amid fears that last month's Brexit vote will have a negative impact on both commercial and residential property prices, particularly in London. In such times it is difficult for open-ended commercial property funds to meet withdrawals.
This is because commercial property funds own property directly, and sales are not quickly or easily arranged - particularly in times of market uncertainty. It is therefore hard to raise money quickly.
PROPERTY FUND SECTOR IS ON ICE
Laith Khalaf, senior analyst at Hargreaves Lansdown, warns that property funds may stay frozen for 'months'.
'Over half of the property fund sector is now on ice. These funds are therefore likely to be closed for weeks and months rather than simply a matter of days. Clearly there has been a knee-jerk reaction to Brexit in the commercial property sector, which may moderate over time.'
But experts stress investors should not panic, particularly those who are in it for the long term. Khalaf adds: 'Investors in commercial property funds should not make decisions in a panic.
'Granted, the Brexit vote may have the potential to negatively affect the commercial property market in the short run, but long-term investors should be willing to ride out periods of weakness, particularly when there has been such a sharp decline in fund prices without much evidence of a slowdown in the underlying property market.'
Shaun Port, chief investment officer of wealth manager Nutmeg, agrees that commercial property funds may remain suspended for months.
'We think all of these funds will now gate, probably for the remainder of the year. This is a stark reminder that low volatility does not mean low risk,' says Port.
'Investors tend to invest on the understanding that they can sell their investment at any time, but the underlying assets - large buildings - are themselves very hard to sell at short notice.
'They require weeks or months to sell. Worse, some properties under development cannot be sold until development work is completed.'