By Kristy Dorsey

A further string of investment managers have joined Edinburgh-based Kames Capital in suspending their open-ended UK property funds amid coronavirus market panic.

Aberdeen Standard Investments, Aviva, BMO Global Asset and Columbia Threadneedle said on Wednesday they would temporarily halt withdrawals from and investments into their respective funds, taking the total amount suspended to more than £8 billion. It follows similar moves by Kames and Janus Henderson earlier this week.

The decision to “gate” is the result of wild market swings in recent weeks as investors fear the Covid-19 pandemic will destroy economic growth. Amid these conditions, the independent valuers who are legally required to regularly assess the financial worth of the properties owned by these funds have been unable to do so, forcing a temporary halt to trading.

Confirming the suspension of its £1.7bn Standard Life Investments UK Real Estate and £1.1bn Aberdeen UK Property funds, Aberdeen Standard Investments said: “Markets around the world have experienced huge disruption as Covid-19 spreads and trading in the UK property market is being severely impacted.

“As a result the funds’ independent valuers have informed us it is not currently possible to provide accurate and reliable valuations for certain assets, including the properties held in the funds.

“We are therefore unable to produce a price for the funds which we can say with any confidence reflects the true value of the assets.”

The assets held by these and similar funds include high street retail outlets, warehouses, office buildings and industrial units, all of which are being affected by the coronavirus outbreak. Retailers have been hit particularly hard as shoppers stay home, which could lead to increased vacancies and lower rental income for property owners.

“Given the pace of developments, price discovery isn’t functioning properly in stock markets – with equities lurching all over the place – due to uncertainty over the impact on earnings,” said Jason Hollands, managing director of online investment service Tilney.

“It isn’t therefore that surprising that the independent valuers used by property funds are saying they can’t arrive at accurate valuations for properties in the current climate.”

This rocky start to 2020 comes after a year of considerable headwinds in 2019 for the property fund sector amid the uncertainties around Brexit. In December, M&G suspended its £2.5bn property fund after investors started withdrawing significant sums amid concerns about the retail downturn and the prospect of a disorderly Brexit.

Mr Hollands said more, or “possibly all such funds”, will be forced to suspend dealings as the Covid-19 outbreak continues to play out. However, he emphasised that this is a different scenario to the last rash of suspensions in 2016, when a series of funds temporarily halted dealings in the wake of the Brexit vote.

“While some will jump to draw parallels with the aftermath of the EU referendum in 2016, when a wave of property funds suspended dealing due to significant withdrawal requests, the current suspensions are less about liquidity and very much to do with uncertainty on how to value the assets held in these funds during the current coronavirus pandemic,” he said.