Hibernian Aviva has lifted the six-month waiting period for investors wanting to sell out or switch from its two main European commercial property funds, in a sign that the continental property market could be stabilising.

According to a letter that the company sent to investors just before Christmas, the deferral period which prevented encashments or switch requests from being executed until half a year had passed has now been lifted, and customers will be able to move money in and out of the funds more freely.

The funds affected are the Aviva Ireland European Commercial Property Fund and the Geared European Commercial Property Fund.

Michael Gordon, Hibernian Aviva's executive manager of investments and funds, said the liquidity position of the funds had improved following the completion of a number of property transactions, meaning cash was available to meet investor demands should they choose to cash out or switch to another fund.

Aviva Investors, which manages the funds on behalf of Hibernian Aviva Life & Pensions, believes much of the capital decline in European commercial property is finished and that the European commercial property market will deliver an average total return of approximately 7% a year over the five years between 2010 and 2014.

On 4 November 2008, Hibernian Aviva introduced a deferral of encashment and switch requests from the funds to prevent their collapse amid rapidly falling property values.

This followed a suspension of encashments from the Aviva Investors European Property Fund, the underlying investment vehicle in which the funds invest, as the property market crashed during the most acute phase of the global financial crisis.

According to the most recent report, the underlying Aviva Investors European Property Fund is worth €249.5m, after reaching highs in 2007 approaching €500m, approximately 73% of which is invested in direct property in seven European countries, including Sweden, Germany and the Netherlands. The remainder is made up of cash and net receivables.

The fund made a small net loss in October and was down more than 13% year to date, while the geared fund lost more than twice that.