(Bloomberg) -- Retail investors pulled €10.2 billion ($11.1 billion) from euro-denominated real estate funds in the year through April amid warnings that falling valuations could create liquidity pressures for the products.

The redemptions mark a huge turnaround from the preceding 12 months, when the funds attracted inflows of almost €2 billion, data compiled by Morningstar show. Total net assets held by the open-ended and exchange-traded property products fell below €163 billion last month, the lowest level since August 2019.

The data comes days after the European Central Bank cautioned that the commercial property market decline may pose a challenge for real estate investment funds. Valuation losses may not have been fully priced, the watchdog said in its financial stability review, which could put stress on the funds’ cash buffers if redemption requests were to surge. 

That, in turn, could force the sale of assets to meet the withdrawal demands. Such a scenario would mark something of a rerun of the aftermath of the Brexit vote, when many UK property funds had to suspend trading and sell assets quickly following a spike in investors pulling their money. 

Property fund managers now typically demand significantly longer notice periods before investors can get their money back.

In the report, the ECB also said commercial property prices could decline further because of the decline in demand for offices in particular. The could impact the asset quality of some lenders as losses start to rise in the sector, it added.

Sterling real estate funds saw a return to withdrawals in April, after a small inflow in March. Investors pulled almost £55 million from the funds last month, bringing total redemptions for the year to more than £927 million.

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