Shopping centres, office blocks and warehouses worth up to £5bn could be put up for sale as the turmoil in the UK commercial property sector prompted by the Brexit vote forces fund managers to revalue their portfolios or temporarily prevent investors withdrawing their savings.

With the pound under pressure on the foreign exchange markets, fund managers Legal & General, Foreign & Colonial and Dutch-owned Kames cut the value of their property funds on Thursday. L&G cut the value of its £2.3bn fund by 10% – following a 5% cut last week – while F&C and Kanes both cut by 5%.

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‘Aberdeen Fund Management announced on Wednesday it was halting trading in its property fund for 24 hours and devaluing it by 17% – thought to be the biggest adjustment ever made by a property fund . Aberdeen has since extended the trading ban until Monday.

Others have suspended dealings for longer, starting with Standard Life’s decision on Monday to halt trading in its £2.9bn commercial property fund, leading to a cascade effect with Aviva, Prudential’s M&G, Henderson, Columbia Threadneedle and Canada Life following suit – taking the total value of property funds suspended to £18bn.

Mike Prew, equity analyst at Jefferies, said buildings could be sold to find the cash to repay investors in the funds: We estimate that £3bn to £5bn of assets could be put up for sale but it’s a trading vacuum and what sells is likely to get a hefty Brexit discount.

“Buildings are now being readied for sale but keys to cash can typically take three to six months.”

London commercial market will be hit by Brexit, says property group
One of the factors weighing on sentiment is uncertainty about the role of London as a financial centre outside the EU. George Osborne, the chancellor, met the heads of major international banks including Goldman Sachs and Morgan Stanley on Thursday to discuss ways to keep the City as a major trading centre. “We are determined to work together,” they said in a joint statement.

Ratings agency Fitch cited “deterioration in market confidence for London City offices following the UK vote to leave the EU” as it downgraded a complex bond – known as Ulysses – secured against the City Point skyscraper.

The property fund sector has been a focus since the Brexit vote and was highlighted in the Bank of England’s assessment of risks to markets, published on Tuesday. Threadneedle Street cited these open-ended commercial property funds, which offer almost instant access to cash, as having the potential to exacerbate problems in the market.

The turmoil has coincided with pressure on the pound, which has been trading at 31-year lows and on Thursday remained below $1.30, well off the $1.50 it reached when the polls closed on 23 June.

However, the London stock market has steadied, with the FTSE 100 gaining more than 1% to 6,533 and the FTSE 250 – regarded as a better barometer for the UK economy and at one point off this week 10% since the referendum – rallying by 1% on Thursday to 15,898.

Yields on UK government bonds – known as gilts – which have halved to 0.7% since the referendum are also being watched as investors seek safe havens and brace for a cut to interest rates as soon as next Thursday. Analysts at Barclays struck a cautious note as they lowered the forecast for UK growth in 2017 to minus 0.4%. “We believe investors should position for a less benign economic and financial environment that is priced into global risk assets,” the Barclays analysts said.

Jason Hollands, managing director of Tilney Bestinvest, said: “Dealing in the property funds could be suspended, possibly, for the remainder of the year.”

He said the revaluations were pre-emptive moves. “Actual commercial property transaction volumes could remain low for some months as deals go back to investment committees and businesses await greater line of sight on who will lead the negotiations between the UK and EU over Brexit and their opening stances,” said Hollands.

Great Portland, which develops and invests in offices, retail space and housing in the West End and other parts of central London, echoed this sentiment, warning it expected London’s commercial property markets to weaken during the uncertainty.

British Land, however, announced it had sold the Oxford Street branch of Debenhams for £400m to an unnamed private investor – although it gave no details of any profit on the sale of the seven-storey flagship department store building. Since the referendum, it said it had exchanged 11 long-term retail leases on terms agreed prior to the vote. “British Land has entered this period of post-referendum uncertainty in a robust position,” said Chris Grigg, chief executive of British Land.