M&G Investments has followed two major finance firms and suspended trading in the UK's biggest commercial property fund following the Brexit vote.

Firms said high levels of uncertainty caused by the referendum have led to investors rushing to withdraw funds.

M&G closed the doors on its £4.4bn fund after Aviva and Standard Life halted trading in similar schemes.

Regulators have put such schemes under review amid warnings that commercial property was a key risk to the economy.

M&G, part of UK insurer Prudential, said it had seen a "marked increase" in customers trying to pull out of the portfolio - which includes retail and office space - after the referendum result.

As with Aviva and Standard Life, the firm said investors would be better protected by preventing any further withdrawals.

Aviva, the UK's biggest insurer, earlier halted its £1.8bn property trust, a day after Standard Life blocked access to its £2.9bn fund.

Image copyright AFP

'Matter of time'

Laith Khalaf, an analyst at stockbrokers Hargreaves Lansdown, said: "The dominoes 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."

It takes time to sell commercial property to meet withdrawals, particularly as investors have been heading for the door in the run up to the EU referendum and in the aftermath, he said.

The last time Standard Life stopped investors taking money out of its UK real estate fund was during the financial crisis in late 2008, while Aviva has never previously done so.

'Illiquid'

Andrew Bailey, chief executive of the Financial Conduct Authority, said the regulator was in close contact with many of the firms.

"I think it does point to issues that we need to look at in the design of these things because it comes back to my fundamental point about holding illiquid assets in open end funds that revalue and are required to be revalued," he said.

The Bank of England is also monitoring the behaviour of investors in the funds, as it sees commercial property as a key risk to UK financial stability.

There are approximately 50 UK property funds in total, with fund managers Henderson and Legal & General also big players.

The suspensions come amid widespread falls in property-related shares since the referendum result.

Housing firms Berkeley Group, Barratt Developments and Persimmon all fell more than 7% on Tuesday, while shares in commercial property firm Land Securities lost nearly 4%.

Shares in the UK's biggest house builders have now dropped more than 30% since 23 June.