Great Portland Estates, has halted all new development until the end of 2010 at the earliest as it downgraded expectations about occupier demand.

Toby Courtauld, chief executive, said yesterday: 'We are now looking down the barrel of a significant downturn and the demand side has [deteriorated] quite strongly.'

Courtauld has emerged as a favourite to succeed Stephen Hester as chief executive of British Land and this fact was mentioned yesterday as the “main investment risk” in a note from analysts at Nomura.

Courtauld pointed to a 66% fall in active demand over the past six months for West End property which, he said, would continue as recessionary pressures led to lower demand for space, higher vacancy rates and falling rental values.

This has meant all new development has stopped for at least two years. Great Portland, which owns many office buildings near Oxford Street, has 19 developments in its pipeline with all but one income-producing.

Financial Times