The slump in commercial property prices has forced British Land, the City offices-to-shopping centre giant, to write £1.39 billion off the value of its assets in just three months.

Portfolio write-downs drove British Land into a £1.33 billion pre-tax loss for the three months to December 31. Excluding writedowns and property disposals, underlying pre-tax profits rose 12.5 per cent to £72 million..

Much of the recent fall in property prices has resulted from the onset of the credit crunch last summer. Demand for assets plummeted as highly leveraged investors were suddenly squeezed out of the market after three years of incessant buying

British Land reported today a 16.7 per cent fall in its net asset value per share to £14.01, the first fall in 14 years since the last property recesson.

Describing the current market as challenging, Stephen Hester, the chief executive of British Land, stressed the sharp write-down in his company's valuations "was important to provide transparency and realism in our portfolio".

British Land, whose holdings range from the Broadgate office complex in London to the Meadowhall shopping centre in Sheffield, marked down the total value of its holdings by 8.9 per cent to £14.58 billon.

The value of Its retail warehouse portfolio, dropped 11 per cent to just over £2 billion, and superstores, by 11.2 per cent to £1.39 billion, both reflecting concerns over wider consumer spending.

It also cut the value of its London offices by 8.9 per cent to £4.45 billion and wrote down its 10.8 per cent stake in Canary Wharf, the docklands office and retail developer, by 17.8 per cent to £185 million.

Mr Hester rang alarm bells over further price falls in the next few months due to uncertainties in the market.

He warned: "The uncertainties around financial markets are slowing decision-making for office occupants in relation to new space needs, though, to date, enquiry levels remain robust."

British Land sold over half a billion pounds of property in the past three months, bringing total disposals to £2.8 billion in the past year. Mr Hester has said that he has a £2 billion war chest to hunt for "opportunities".