Land Securities, Britain's largest commercial property company, has written down the value of its shops and offices by £1.28 billion as it slumped to an £888 million loss.

The fall in the value of the company's buildings during its latest year is the largest and steepest decline over such a short period, worse even than at the height of the 1990s recession.

The 8.8 per cent decline in its asset values resulted in Land Securities reporting a pre-tax loss of £888.8 million for the year to March 31, against profits of £1.98 billion the year before.

Francis Salway, the chief executive, gave warning yesterday of further possible price falls for commercial property over the coming months as concerns mount about rental demand weakening for both retail and office space.

Mr Salway said that there were growing fears about weakening consumer confidence and a spread of job losses beyond the City to the wider economy. “Since January, people have been more cautious on the economic outlook and that has extended beyond financial services markets,” he said. “We would agree with that and have allied ourselves to the risks around that.”

Land Securities sold £1.56 billion of buildings last year, booking gains, and its line of developments due for completion over the next two years is relatively small, particularly in London. The group has put up for sale its one-third stake in the Bullring shopping centre in Birmingham for £300 million. Gearing, the value of loans to assets, is 40 per cent and the company has £630 million of cash and bank facilities ready to buy from distressed sellers.

Mr Salway said that he had started to look at buying opportunities in and around London over the past few months, including both offices and shop assets.

It is believed that Land Securities has cast the slide rule over retail parks belonging to Capital & Regional (C&R), the heavily indebted retail property manager. C&R is trying to sell about £300 million of buildings in the £1.9 billion Mall fund, which it co-owns and manages but in which loan covenants are under pressure. Mr Salway declined to comment about C&R.

Land Securities is in the process of breaking up the company into three separately quoted businesses containing London properties - mostly offices, but also some large shopping schemes - a retail real estate business and the group's Trillium property outsourcing division.

Mr Salway said that the demerger plans was progressing to plan and confirmed that Land Securities had received separate bids for Trillium, which analysts value at £1.5 billion.

Barratt Developments, Britain's second-largest housebuilder, gave warning on profits yesterday after reservations for its new homes fell by half and an increased number of buyers withdraw from purchases. The company became the latest large builder to put the freeze on expansion.

The value of Barratt's book of forward orders, which includes reservations and exchanges on house purchases, stands at £1.56 billion, a 26 per cent decline on the £2.1 billion booked at this time last year.

Mark Clare, the chief executive of Barratt, ruled out the need for any rights issue after the latest refinancing and based on current trading.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts