Allianz SE, Europe’s biggest insurer, is delaying plans to make its first UK commercial real-estate investments because the deepening recession caused rents to fall and increased building vacancies.

'We thought last year that the UK was the right time and then we realised ‘no,’' said Olivier Piani, chief executive officer of the company’s property investment arm, Allianz Real Estate, in an interview. 'The unknown in the U.K. is how sustainable rents are in today’s economy.'

Allianz announced a plan in March to increase its €17bn ($23bn) of real-estate investments to about €30bn during the next five years. It had targeted the UK, Europe’s largest investment market, amid a slump in property values and the weak British pound.

The Munich-based company is waiting to see how far rents will fall as tenant-default rates rise. Office rents in central London dropped 25 percent in the first quarter from a year earlier, while vacancy rates in the main financial district increased to 9.7 percent from 7.1 percent at the end of 2008, according to adviser CB Richard Ellis Inc.