Insurer Friends Provident has told investors in its £1.2bn property fund that they must wait to access their money because of a market downturn.
It said it had taken the measure to avoid having to sell commercial property such as shops and office blocks in a hurry at low prices.
Investors must now hold off for six months before being able to take cash.
The BBC's business editor Robert Peston said there has been a "collapse of confidence in commercial property".
"The flight from property is a pronounced trend," he explained.
"Friends is the first fund to prevent retail investors cashing in, but other fund managers, including Schroders and UBS, have put a block on withdrawals by institutional clients," he added.
"Their behaviour is rational, if alarming.
"Unless investors' demands for redemptions are stemmed, there would be forced sales of substantial properties," Mr Peston continued.
"And such forced sales would precipitate a vicious, self-reinforcing downward spiral in property prices."
Friends, Britain's fourth-largest insurer, added that the fund remained open to new investors. It currently has 118,000 retail investors.
Friends said that its decision to stop withdrawals "reflects the general sharp decline in investor demand for UK commercial property".
As real estate can take months to sell, property funds keep a proportion of their assets in cash to pay any investors who want to leave.
It has been reported that the fund's cash buffer of 14% in July had been reduced to 5% by departing customers.
The BBC's business editor explained that the worry for many financial institutions was that problems would now emerge in the commercial property sector.
"Most at risk are the tycoons who have borrowed substantial sums to acquire properties on their own account as the property bubble inflated in the last few years - and second in the queue for pain are the lenders to such tycoons," he explained.
Any such problems would hit many lenders hard, especially as they have been wrestling with the fall out from a slowdown in the US housing market and losses in the sub-prime sector.
Sub-prime loans and mortgages are made to people with poor or non-existent credit histories.
"For banks and other financial institutions, the next wave of losses after sub-prime is likely to come from direct and indirect lending to commercial property," Mr Peston said.