Shares in companies that deal with commercial property have fallen by more than 40% during the past 12 months, but the worst may not be over if we examine what is happening in the underlying real-estate market.

Deals have dried up. Just £17 billion of commercial property has been sold so far this year — the same amount that was sold in the third quarter of 2007 alone.

In central London CB Richard Ellis the world’s biggest real-estate agent, says only £5.2bn of office buildings have been sold in the year to date, compared with £17.5bn for 2007 as a whole.

Meanwhile, values are plunging. CBRE predicts that property values will have dropped roughly 20% by the end of the year — but that figure could rise after the collapse of Lehman Brothers and the events that have followed in the global economy.

Sunday Times