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.

The 8.9 per cent writedown is the largest fall in asset values admitted to so far by any of Britain's large property companies, as the industry grapples with steeper declines to prices of shops and offices than those suffered during the recession of the early 1990s.

Stephen Hester, chief executive, gave warning that demand for new City office space had stalled over the past few weeks as big financial services firms evaluate whether to make more job cuts.

The decline meant British Land, whose holdings range from London's Broadgate office complex to Sheffield's Meadowhall shopping centre, took a 16.7 per cent fall in its net asset value per share to £14.01, its first fall in 14years. Portfolio writedowns drove the FTSE 100 company into a £1.33 billion pre-tax loss for the three months to December 31. Excluding writedowns pre-tax profit from rental income and trading assets rose 12.5 per cent to £72million. Much of the falls derive from last summer's credit crunch. Mr Hester said: “Probably the worst is behind us - although it could be a false dawn as things could go wrong in the broader markets. Based on a short amount of evidence [of deals] in January, things are looking brighter.”

Hopes that prices will soon stabilise depend on demand holding up for leasing new space. Mr Hester said: “We are still seeing encouraging signs in our retail - we are still letting and increasing the value of our rental levels.”

In the City offices market, however, which accounts for some £4.5 billion of British Land's £14.58 billion property portfolio, Mr Hester said there was, “a pause” in rents.

“They are neither going up nor down while office occupiers determine near-term head count. In the medium-term we are relaxed. People are visiting as much as they did in the summer, but as for those writing big cheques at the moment, there aren't many. They are pausing.”

British Land wrote down the value of its offices assets, nearly all of which are in London, by 8.3 per cent to £5.66billion over its third quarter. The company slashed its retail portfolio by 9.5 per cent to £6.1 billion over the same period, meaning those assets have fallen 11.1 per cent since March.

The company's superstores, which include a number of large Tesco and Sainsbury's sites, were the hardest hit - marked down 11.2 per cent between October and December to £1.39 billion.

Mr Hester said: “I think we are likely to have marked down our assets faster and further than some others. We are strongly of the view that the quicker you get the financials to reflect reality, the quicker investors will have the confidence to come back to the market and do business.”

British Land is in talks to sell three superstores for about £100 million, a price that reflects the 10 per cent-odd writedown on assets, Mr Hester said.

British Land sold £596 million of property in the past three months, bringing total disposals to £2.8 billion in the past year. Mr Hester has a £2 billion war chest to hunt for “opportunities”, but has yet to start buying.

The shares fell 12p to 949p.

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