Returns from commercial property fell to record lows last quarter. Total returns across all property classes in the last quarter of 2008 were minus 12.8 per cent, according to property consultancy Jones Lang LaSalle, which dragged returns for the full year down to minus 21.2 per cent.

Jones Lang LaSalle said the performance was driven by a combination of a severe price correction and the slowdown in rental growth, adding further evidence of the extent of the downturn in the UK market to date.

Gains made on investments in the five years of the boom up to summer 2007 have now been wiped out. Capital values are now broadly in line with December 2001 levels, according to Investment Property Databank, when the property market started its recovery from the mild downturn caused by the dotcom bust.

The value of property fell 14.3 per cent in the fourth quarter of 2008 across all classes, said Jones Lang LaSalle, and by slightly more than a quarter in total on an annual basis, with offices and retail the worst performing sectors.