The doors are reopening on the £35bn of investors’ money locked in commercial property funds, after they were suspended in the wake of the Brexit vote when panicking investors feared a collapse in values.

Shortly after the EU referendum result, Standard Life halted trading in its £2.9bn fund, with Aviva, M&G, Henderson and Columbia Threadneedle soon following suit. It meant investors could no longer access their cash held in the funds. What’s more, most of the funds added a “fair value adjustment”, in effect marking down the value of the properties they owned and therefore shrinking investors’ holdings. Legal & General slapped a 15% discount on its fund, and Kames 10%, while others slashed theirs by around 5%.

Since the EU vote the funds have sold off properties to free up cash to enable them to pay investors who want to redeem their holdings. Many now plan to reopen in October, and some are removing the fair value adjustments. But others could remain closed for months, with Aviva saying in August that its fund would remain suspended for six to eight months.

The £4bn M&G Property Portfolio said it should have enough cash assets to reopen within the next six weeks. Henderson said it will reopen its £3.3bn UK Property PAIF fund on 14 October, with investors able to place orders to deal from this week. Henderson insists that its post-Brexit fire sale of properties has not left investors out of pocket, in a sign that the UK commercial property market has not been devastated by the vote, as some feared.

The fund’s manager, Ainslie McLennan, says all the sales made over summer were at prices higher than they were originally bought for. But it has meant that some managers have had to sell their most “liquid” assets – in other words, the most desirable ones, with plenty of potential buyers, rather than their lower-quality properties which are left lurking in the portfolio and possibly dragging down future performance.

Among the properties sold by Henderson was the Amazon distribution centre in Peterborough. The fund had only acquired it in December, and McLennan says she managed to dispose of it with a positive return of 5%.

Logistics centres such as the Amazon unit are in huge demand from investors, as shoppers switch from high streets to buying online. “We managed to sell assets at compelling prices. We have not had a single issue with the prices of the assets we have sold. On every sale completed we have achieved a positive return,” McLennan says.

“We have done these deals in the most orderly way we can, and for the situation not to go on too long, so we can reopen the fund. And it’s not just about opening for redemptions. There’s actually a queue of people who want to get in as well.”

But the crisis in property funds has exposed a long-running controversy over the practicality of running bricks-and-mortar properties within a fund, as they can never hope to pay out small investors immediately if lots decide to cash in at the same time.

Marc Haynes of wealth managers Cohen & Steers said it is the second time property funds have had to be suspended, with many closing during the 2007-08 financial crisis. “The surprise was not the ‘gating’ of these funds, but that a key lesson from the last crisis had been ignored. In our opinion, open-ended funds are fundamentally inappropriate vehicles for investing in inherently illiquid investments such as physical property.

“To paraphrase Oscar Wilde, to have to ‘gate’ once may be regarded as a misfortune; to ‘gate’ twice looks like carelessness. Presumably, managers thought that things would be different this time and enhanced liquidity buffers would provide adequate protection against substantial withdrawals linked to market stress.”

But McLennan is adamant they should remain a core fund choice for small investors. “They absolutely work. Look, this fund has never been suspended before. It was an absolutely extraordinary vote. We did have enough of a cash cushion, but there was contagion and we dealt with that. If there’s a lesson, then maybe it’s to hold a bit more cash.” The arguments for remaining in commercial property funds are secure. “People have had very good long-term returns from commercial property and they continue to give a solid income. We’ve not wavered on that.”

Currently, the annual yield on most property funds is around 3%-4%, an attractive figure compared to the near-zero interest rates paid on deposit accounts. McLennan adds that much of her portfolio is on 10-year leases, meaning the future income stream is secure.

But a report from Moody’s, to be published next week, will forecast that UK commercial property prices will decline by around 10% over the next two years. Most funds are invested in City of London office blocks, some of which may become vacant if investment banks or financial services firms decamp to Frankfurt or Dublin in the wake of Brexit.

Laith Khalaf at Hargreaves Lansdown is more optimistic. “The fundamental trends that led to the popularity of property as an asset class are still in place, with interest rates still low and gilt prices still high. Economic uncertainty casts a shadow over the sector for sure,” he says. “But as yet we lack real data on what the full impact of Brexit will be.”