January 7, 2008 (LPAC)--The only thing that kept British commercial property prices up last year is the fact that no one dared to put their assets up for sale, but now LaSalle Investment Management put Condor House, on the market for 130 million pounds ($256 million) six months ago. The building sold last month for about 117 million pounds, 10 percent below the asking price. According to Bloomberg, appraisal values for commercial property and derivatives contracts fell at a record rate in November indicating commercial property companies could suffer their biggest annual losses in more than a quarter century.

“The U.K. market is falling apart,” Bloomberg.com quotes Peter Hobbs, London-based head of research at RREEF Real Estate, a Deutsche Bank AG said. “There's a risk that this cyclical downturn turns into something worse.” Britain's 700 billion-pound commercial property market will perform worse in 2008 than in the rest of Europe, the U.S. and Asia, Hobbs said.

Jones Lang LaSalle Inc., the world's second largest commercial real estate broker, estimates transactions in the U.K. are down 60 percent during the last quarter of 2007 to about 5 billion pounds.

One major reason for the spiraling collapse is that companies are being forced to sell assets because of the withdrawal of funds by investors. “Further net outflows could result in funds being forced to liquidate assets, which could potentially spark a spiraling sell-off in the market,” said Sally Collins, a senior adviser at Bestinvest, which counsels British savers with more than 2 billion pounds of investments.

Projects that are already under construction are failing to find tenets, especially as banks and financial companies are laying off thousands of workers. British Land has yet to find tenants for its Ropemaker and Leadenhall Building developments in London's main financial district, which are scheduled to be completed by 2011. The company's shares tumbled 45 percent in 2007, exceeding the average 39 percent decline for U.K. real estate stocks.