Norwich Union has barred withdrawals from its unit-linked life and pension property fund over fears a wave of investors could pull out because of the slump in the UK commercial property market.

The measure means that 225,000 investors will be unable to redeem money from the fund, which has £2.9bn of assets under management, for six months.

The insurer fears large numbers of investors pulling out, resulting in it being forced to sell assets at low prices in order to raise sufficient cash to pay them.

Commercial property values have fallen 35.5% from their peak of April 2007, according to figures from the leading index provider IPD, and the sale process is also taking longer because of the scarcity of buyers.

Daily Telegraph