AXA became the latest victim of the crisis in the commercial property market yesterday as it imposed a six-month ban on investors withdrawing funds from its £2.1 billion portfolio. The move by the France-based investment manager, one of the biggest in Europe, affects 125,000 UK savers and investors with funds in AXA's two big property funds, worth £1.2 billion and £895 million, respectively.

The group said that, after a “significant increase” in customer withdrawals, it had begun to sell off properties to meet redemption payments. However, the slowdown in the market has meant that it can take up to five months for a sale to go through, prompting AXA to call a halt to withdrawals.

“Like many other companies, AXA has seen a significant increase in the level of withdrawals from its property funds which invest in commercial property, and we now have to sell properties in order to raise the cash to meet those withdrawals,” the manager wrote in a letter sent to customers yesterday.

“Because it can take several months to complete a property sale, we feel it is necessary to take temporary measures to ensure the fair treatment of all investors in these funds.”

A spokesman said that AXA's property funds had been on a “watching brief” with its investment panel for “weeks, possibly months”. He said the move reflected the sharp slowdown in the investment markets for commercial property, which has forced other managers to bar the exit to investors, albeit temporarily.

At least seven other fund managers have suspended withdrawals on their property funds in the past three months. These include Scottish Equitable, Threadneedle, Scottish Widows, Aegon, Close Investments and Friends Provident.

AXA said that it remained convinced that property continued to be a “solid long-term investment”.

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