UK property funds are no longer trying to sell some of their central London buildings, as investors have started putting money back into the sector — reversing a stampede for the exit that followed the UK’s EU referendum.

Several assets worth £100m or more were put up for sale over the summer, to the provide the cash the funds needed to let investors take their money out. However, agents say many of these buildings been withdrawn from sale since fund flows turned positive in August. Money has gone back into the funds, they claim, because investors’ need for income-generating holdings has overridden their concerns about the effects of Brexit.

This month, Zurich’s Property Fund, managed by Columbia Threadneedle, halted the £100m sale of two office buildings in Camden, known as Centro 3 & 4, after receiving bids to buy them, according to people briefed on the situation. Columbia Threadneedle declined to comment.

Similarly, BlackRock’s UK Property Fund has scaled back a portfolio sale known as “Project Rio”, and will now sell £85m-worth of property assets instead of £200m-worth. This move comes a month after the fund stopped its £100m sale of a Covent Garden building, 25 Bedford Street.

BlackRock declined to comment, but a person close to the fund said a return to net inflows was a factor in its change of heart.

After the UK voted to leave the EU in June, UK property funds holding £15bn of assets were forced to halt redemptions because they had received more requests for cash withdrawals than they could immediately meet. Other property funds, such as BlackRock’s, remained open but increased their redemption charges.

Institutional funds, such as the Zurich product, did not face the same level of withdrawal requests, according to the pension consultants Hymans Robertson. However, the low levels of cash in these funds still left struggling to meet investor demands for liquidity.

Retail investors have now withdrawn a net £3bn from property funds this year, but flows turned positive in August, when the Investment Association recorded £1m of inflows. Early estimates from data provider Morningstar suggest inflows increased in September.

One property agent, who asked not to be named, claimed the return to positive flows showed that investors’ search for yield was trumping their concerns about the impact of Brexit on the property market. “When the funds needed to raise money, they focused on London because those are bigger buildings and more saleable, but now some of those are being pulled off the market,” the agent said.

To meet that initial need to raise money, funds were forced into a series of property sales earlier in the year. BlackRock sold the European headquarters of Sony PlayStation for £104m and Henderson’s property fund sold Coutts’ headquarters on the Strand.

But capital values in the sector have held up better than some analysts expected, although transaction volumes have been thin. After a 2.4 per cent drop in July, according to the IPD index, values were almost flat for two months and rose 0.2 per cent in September.

While most suspended property funds have now reopened, the industry faces questions from the Financial Conduct Authority about how it will handle future liquidity crises and whether investors are fully aware of the risks.

Some investors still have concerns about the effect of Brexit on commercial property, though. Listed real estate stocks continue to trade at prices 10 per cent below their pre-referendum levels, according to the FTSE EPRA/NAREIT UK index.

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